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NIBE to acquire Climate Control Group from LSB Industries for USD 364 million

om LSB Industries for USD 364 million

Complementing NIBE as a global leader in sustainable energy and indoor climate

Markaryd, Sweden, 2016-05-12 08:42 CEST (GLOBE NEWSWIRE) -- Transaction

-- Sweden-based NIBE, one of the leading European climate solutions providers,
buys The Climate Control Group (“CCG”), a leading manufacturer of HVAC
solutions for commercial and residential applications in the North American
market. CCG is well-known for its subsidiaries and respective brands
ClimateMaster, IEC, ClimateCraft and ClimaCool and dovetails well with
NIBE’s existing US operations. At year-end 2015, CCG had 1,259 employees
and net sales of USD 274 million (SEK 2,312 million1).
-- For the acquisition of all of the shares of CCG, Nasdaq Stockholm listed
NIBE agreed to pay NYSE listed LSB Industries, the US manufacturing group
and owner of CCG, a total purchase price of USD 364 million (SEK 2,964
million2), on a debt-free/cash-free basis, in cash at completion.
Completion is subject to customary regulatory approval and expected to
occur in the third quarter of 2016.
-- The acquisition of CCG represents another major step in NIBE’s history
following the additions of the Schulthess Group (CH) and Emerson Heating
Products (USA) both in 2011, Stovax (UK) in 2013 and WaterFurnace Renewable
Energy (USA) in 2014. While funding the acquisition with fully committed
credit facilities at completion, NIBE announces herewith its plans for a
rights issue relating to NIBE shares worth SEK 3,000 million within due
course following completion. It will allow NIBE further to pursue its
growth targets.
-- After carve-out from LSB Industries, CCG will operate as a separate entity
under the leadership of Rick Aldridge of CCG and his team, forming part of
NIBE’s business area NIBE Climate Solutions. NIBE intends to back up
management in accelerating current growth and profitability initiatives and
to develop CCG as a separate growth platform for NIBE in North America. CCG
will provide NIBE with complementary know-how and technologies, new HVAC
products and access to the commercial customer segments.

Markaryd, Sweden, and Oklahoma City, USA – May 12, 2016 – NIBE Industrier AB
(publ) of Sweden ("NIBE") and LSB Industries, Inc. ("LSB"), (NYSE: LXU), today
announced that they have entered into a stock purchase agreement (the
"Agreement") pursuant to which NIBE will acquire 100% of the outstanding shares
of The Climate Control Group, Inc. ("CCG”) from LSB for a purchase price of USD
364 million, on a debt-free/cash-free basis, in cash at completion.

CCG is the holding entity of the operating companies ClimateMaster, Inc.,
International Environmental Corporation (IEC), ClimateCraft, Inc., ClimaCool
Corp., Koax Corp. and ThermaClime Technologies, Inc. These companies, all of
which are located in Oklahoma City, represent highly-renowned manufacturers and
brands of commercial and residential climate control products, such as water
source and geothermal heat pumps, hydronic fan coils, modular geothermal
chillers, and large custom air handlers, serving predominantly commercial
customers in the United States. Also known as the Climate Control Business, CCG
is one out of the two divisions of LSB.

“This transaction further elevates NIBE’s position as one of the global players
in sustainable energy and indoor climate solutions. Following our successful
expansion of our Element and Climate Solutions businesses in the United States
in recent years, the acquisition of CCG is a logical step for us to broaden our
presence. We are pleased to be able to continue the successful development of
CCG that began almost fifty years ago. Together with all employees and the new
management team under Rick Aldridge, we look forward to starting a new phase in
CCG’s history,” said Gerteric Lindquist, CEO of NIBE.

1) Financial 2015 data converted to SEK at FY2015 average SEK/USD exchange rate
of 8.435.

2) Converted to SEK at SEK/USD exchange rate of 8.143 as per May 11, 2016.

"We are all very excited to join NIBE as we continue to grow the business and
provide our customers with innovative and leading climate control solutions.
NIBE represents a highly complementary fit in terms of geography, products and
customers, having little overlap with our operations. We expect this
combination to deliver meaningful benefits to our business partners, customers
and staff as we accelerate the realization of the growth and profitability
initiatives we set into motion late last year,” said Rick Aldridge, CCG.

“On behalf of the Board and management team of LSB, I want to thank the
talented employees of CCG, who I am confident will continue to thrive as part
of NIBE. This sale represents another successful milestone in the strategic
transformation of LSB. We look forward to continuing to grow our Chemical
Business and wish NIBE/CCG a very successful future,” said Dan Greenwell,
President and CEO of LSB.

With the origins of one of its entities, ClimateMaster, dating back to the late
1950s when it was first founded in Florida, the basis for today’s CCG was
established by Jack E. Golsen in Oklahoma City in 1969. Today, CCG designs,
manufactures and markets high quality air-conditioning, ventilation, heating,
and heat pump products used in commercial, industrial, and residential
structures. The products are targeted to new buildings, renovation of existing
buildings, and replacement of existing heating and air-conditioning systems.
CCG products are quietly and efficiently cooling and heating thousands of
buildings, including hotels, resorts, apartments, condominiums, single-family
residences, dormitories, hospitals, extended care facilities, schools,
universities, office buildings, data centers, airports, industrial and
high-tech manufacturing facilities, pharmaceutical and food processing plants.
As one of the technology leaders, CCG prides itself on a large installed base
of products in premier properties and homes throughout North America.

In terms of technology edge, the geothermal heat pump of ClimateMaster, for
example, is one of the most energy efficient and environmentally friendly
heating and cooling products commercially available worldwide today. They are
non-ozone depleting and a form of renewable energy. Many of the other products
are also highly energy efficient and attuned to the environment. CCG products
have been used in many LEED certified buildings, including some that are LEED
Gold and LEED Platinum rated.

With manufacturing and distribution facilities in Oklahoma City totaling over
one million square feet, CCG has advanced fabrication equipment, automated
quality control systems, and state-of-the-art product design and testing
facilities. Products are marketed under own proprietary trade names and on
private label basis to other leading HVAC manufacturers. CCG’s products are
marketed and distributed via a large number of independent manufacturers’
representatives, representing approximately 70% of sales, and OEM as well as
wholesale distributor channels, representing together the remaining 30% of
sales. Customers may range from engineers, architects, renovation contractors
to wholesale distributors and reps as well as HVAC retailers, contractors and
builders, respectively.

In the financial year 2015, CCG had reported net sales of USD 274 million,
EBITDA of USD 25 million, after non-GAAP reconciliation, and operating income
(EBIT) of USD 20 million.

For additional company information relating to CCG and its subsidiaries visit
the following sites:

Transaction Details

Under the Agreement to acquire all of the shares of CCG, NIBE will pay LSB a
purchase price of USD 364 million (SEK 2,964 million1), on a
debt-free/cash-free basis, in cash at completion. Based on NIBE’s own forecast
assumption for CCG, not taking into account any transaction-related cost,
financial, synergy or tax benefit effects, the purchase price would represent a
current year EV multiple of 11.4 times EBITDA.

NIBE anticipates funding the acquisition of CCG via fully committed credit
facilities at completion.

The completion of the transaction is subject to the receipt of the required
approvals under the United States Hart-Scott-Rodino Antitrust Improvements Act
of 1976 and the satisfaction of other customary conditions. These conditions
are anticipated to be fulfilled in the third quarter of 2016.

LSB will continue to provide CCG with certain services for a transitional
period of 18 months free of charge.

NIBE and LSB agreed to make a joint election under Section 338(h)(10) of the
Internal Revenue Code, which treats the transaction as an asset purchase for
tax purposes. The election generates a tax benefit with an estimated present
value of USD 49 million (SEK 402 million1) for NIBE and its shareholders.

Financial Effects on NIBE

For the financial year 2015, CCG achieved reported net sales of USD 274 million
(SEK 2,312 million2), adjusted EBITDA of USD 25 million (SEK 208 million),
after non-GAAP reconciliation, and EBIT of USD 20 million (SEK 168 million).
Based on 2015 financial data, pro forma NIBE net sales and EBITDA, including
CCG but excluding any transaction effects, would have increased by +17% and
+10% respectively, amounting to net sales of SEK 15,555 million (USD 1,844
million) and EBITDA of SEK 2,388 million (USD 283 million). The pro forma
EBITDA margin of the combined group would have been 15.4%. For the current
financial year, NIBE expects CCG to achieve net sales of approximately USD 290
million and adjusted EBITDA of approximately USD 32 million.

NIBE expects synergy effects to occur mainly in the area of improved material
purchasing and certain efficiency gains over time. Due to the complementarity
of NIBE and CCG, whereby NIBE Climate Solutions focuses on residential and CCG
predominantly on commercial customers, sales channel synergies are deemed to be
immaterial. For the financial year 2017, CCG is expected to reach an EBIT
margin exceeding NIBE’s group target of 10%. In the long run, the expanded
group will be better positioned a) to successfully compete with the much larger
global HVAC peers of the US and Asia and b) to develop its offering of heat
pump, cooling and ventilation products into climate solution sales targeting
larger commercial customers.

Including the planned rights issue, the transaction is expected to be accretive
to the earnings per share of NIBE as from financial year 2017 onwards. On a pro
forma 2015 basis, NIBE’s net debt to EBITDA ratio would ha...

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