Sandvik acquires majority stake in China-based Ahno Precision Cutting Tool Technology

Sandvik, a global engineering group, has announced its acquisition of a majority stake in Suzhou Ahno Precision Cutting Tool Technology Co., Ltd. (Ahno), a leading provider of precision cutting tools based in China. The agreement involves purchasing the majority shares from the current owner, Ningbo Baosi Energy Equipment Co., Ltd, and related parties. This acquisition is set to be integrated within Sandvik Machining Solutions, marking a significant step in Sandvik’s strategy to strengthen its presence in the Chinese market.

Ahno is well-positioned in the premium segment of the fast-growing Chinese market, offering an extensive range of products and services with a substantial sales, distribution, and production footprint across China. The company primarily serves the general engineering and automotive industries, including a significant focus on electric vehicles, and is expanding into the medical sector. With this acquisition, Sandvik Machining Solutions aims to consolidate its leading position in round tools and enhance its overall market offerings.

Following the transaction, Sandvik will hold a 72.4% stake in Ahno, up from a previous minority stake of 12.4%. The acquisition is valued at an enterprise value of CNY 1,456 million (approximately 189 MEUR), corresponding to a multiple of 10.9 x EV/EBITDA for 2024. The deal, which generated revenues of approximately CNY 812 million (about 1.2 BSEK) in 2023 from Ahno, mainly within China, is expected to have a limited impact on Sandvik’s EBITA margin but will positively affect earnings per share (excluding non-cash amortization effects from business combinations).

The transaction is anticipated to close during the third quarter of 2024, pending customary closing conditions. Post-acquisition, Ahno will operate as a new division within Sandvik Machining Solutions, while Sandvik’s existing international tooling brands will continue their operations in China as currently structured. This strategic alignment will create a robust platform for growth in the Chinese market, particularly in segments experiencing rapid expansion such as electric vehicles.

Stefan Widing, President and CEO of Sandvik, expressed confidence in the acquisition, stating, “This acquisition will strengthen our position in the strategically important Chinese market. Ahno’s competitive assortment and closeness to customers is a great platform to drive further growth of our tooling business in China.” Nadine Crauwels, President of Sandvik Machining Solutions, also highlighted the strategic fit of Ahno within Sandvik’s growth plans in China, emphasizing enhanced local production capabilities and a strong position in the local premium segment.

This move by Sandvik represents a strategic expansion aimed at capitalizing on the growing demand for precision tools in China, especially in high-growth sectors like electric vehicles and medical equipment. By integrating Ahno’s local expertise and established infrastructure with Sandvik’s global reach and technological capabilities, Sandvik is well-positioned to leverage market opportunities and drive sustainable growth in the region.