Mergers & Acquisition

ATS to Acquire Leading Global Automation Services and Solutions Provider M+W Process Automation

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ATS Automation

730 Fountain St. North, Cambridge, ON, N3H4R7, Canada

Original Press Release

ATS to Acquire Leading Global Automation Services and Solutions Provider M+W Process Automation

Press release date: July 8, 2014

CAMBRIDGE, ON –¬†ATS Automation Tooling Systems Inc. (TSX:ATA) ("ATS" or the "Company") today announced it has entered into a definitive agreement to acquire all shares of M+W Process Automation GmbH and ProFocus LLC, collectively M+W PA, a leading global provider of engineering-based automation services and solutions focused on the control, performance monitoring and measurement of critical production processes.

Headquartered in Germany and established 28 years ago, M+W PA addresses the needs of a wide spectrum of manufacturing and process-based industries including automotive, pharmaceutical, biotechnology, chemicals, oil gas and food with services that include consulting, system engineering, integration, lifecycle management, process control and manufacturing execution systems, as well as enterprise programs, where M+W PA acts as the main automation contractor ("MAC").

The acquisition is aligned with ATS's stated strategy of scaling its position in the global automation market by adding to its services and life-cycle management capabilities across several core elements of the customer value chain. The addition of M+W PA is expected to enhance growth opportunities in both new markets and with existing customers.

"M+W PA's capabilities complement ATS's solutions in strategic customer markets and open new opportunities in several attractive industries," said Anthony Caputo, ATS Chief Executive Officer. "We welcome M+W PA's highly skilled people, global and local customers, high value service offerings, scale and worldwide presence to our automation business and look forward to continued successful collaboration with M+W Group."

M+W PA's workforce of 1,000, including approximately 750 engineers, serves customers from 51 locations in 16 countries around the world, and is led by a highly experienced management team based in Europe and the U.S. As part of ATS, M+W PA is expected to continue to enhance its portfolio, serve existing M+W PA and ATS customers and build new customer relationships together with ATS.

"We are pleased that our automation business is becoming part of ATS," said Dr. Olaf Berlien, CEO of M+W Group. "ATS is ideally suited to maximize the business area's potential for further worldwide growth. As we will be focusing more on our core business the change of ownership will be very beneficial both for M+W and all employees of the automation business."

In calendar 2013, M+W PA had revenues of approximately Euros166 million and Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") of approximately Euros20 million. Over the past three years, M+W PA's revenues have grown organically at an average annual rate of approximately 19%. Sales by industry segment in 2013 were 41% automotive, 26% chemicals, 13% pharmaceuticals and biotechnology, 3% oil & gas and 17% other industries including food and beverage, water, wastewater, consumer care, paper, metal and semiconductor. Europe accounted for approximately 70% of global sales, North America 27% and Asia 3%. In calendar 2013, M+W PA's order bookings were Euros188 million, and at the end of May 2014 it had approximately Euros120 million of backlog.

Subsequent to the completion of the transaction, the Company expects M+W PA to benefit from the adoption of ATS best practices in approach to market, key account management, front-end-of-the-business processes, performance management and corporate strategy. M+W PA's significant capability and market position is expected to benefit ATS and its strategy to grow its business. The Company expects meaningful revenue synergies through an expanded ATS offering, which will now include M+W PA's process controls, software integration, MES, remote monitoring, lifecycle management, modeling and simulation capabilities. M+W PA provides an imbedded engineering, service and sales force, with early insight into customer preferences, developments, problems and programs, allowing M+W PA to act as first responders for post-automation services and equipment maintenance. M+W PA is expected to have increased opportunity to expand its MAC offering by utilizing ATS on a subcontractor basis to address capability gaps across a number of industries. Further, both ATS and M+W PA are expected to have opportunities to engage customers on a more comprehensive basis. Cost synergies are expected to be nominal.

The purchase price based on enterprise value of approximately Euros248 million (CDN $362 million at current exchange rates) is subject to net debt and working capital adjustments and will be funded from a new fully committed C$600 million credit facility underwritten by The Bank of Nova Scotia and The Toronto-Dominion Bank to be available at closing. With net assets of approximately $20 million, management expects that $342 million of the purchase price will be allocated to goodwill (approximately 60% to 65%) and intangibles (approximately 35% to 40%), subject to completion of the purchase price allocation, which may take up to one year to complete subsequent to transaction closing. Amortization of intangibles is expected to be $10 million to $14 million per annum. In addition, the first six months after acquisition will include substantially all of the amortization of acquired backlog which is expected to be in the $7 million to $10 million range.

On a pre-synergy basis, we expect the following:

• Dilution at the Earnings per Share ("EPS") level in the high single digits assuming two quarters of inclusion of M+W PA's results in fiscal 2015, due to the incremental amortization of backlog which is not expected to continue beyond fiscal 2015;
• In fiscal 2016, EPS accretion in the high single digits;
• On a Cash Flow per Share basis, in fiscal 2015 we expect immediate accretion, in the high single digits; and
• Cash Flow per Share accretion in fiscal 2016 is expected to be in the mid teens.

ATS expects to complete the acquisition by the end of September 2014, subject to customary closing conditions, including applicable antitrust approvals.

TD Securities Inc. and Joh. Berenberg, Gossler & Ko. KG Berenberg Bank are acting as financial advisors to ATS. Freshfield Bruckhaus Deringer LLP and Borden Ladner Gervais LLP are acting as legal counsel to ATS.

Conference Call and Webcast
At 10:00 a.m. eastern on Tuesday July 8, 2014, the Company will host a webcast and an analyst conference call with follow-up question and answer period to discuss the transaction.

The listen-only webcast can be accessed live at www.atsautomation.com. The conference call can be accessed live by dialing (647) 427-7450 10 minutes prior.

A replay of the presentation will be available on the ATS website following the call. Alternatively, a telephone recording of the call will be available for one week (until midnight July 15, 2014) by dialing (416) 849-0833 and entering passcode 71530627 followed by the number sign.

About ATS
ATS Automation provides innovative, custom designed, built and installed manufacturing solutions to many of the world's most successful companies. Founded in 1978, ATS uses its industry-leading knowledge and global capabilities to serve the sophisticated automation systems' needs of multinational customers in industries such as consumer products & electronics, energy, life sciences and transportation. It also leverages its many years of experience and skills to fulfill the specialized automation product manufacturing requirements of customers. The Company's Solar segment is classified as discontinued operations. ATS employs approximately 2,500 people at 23 manufacturing facilities in Canada, the United States, Europe, Southeast Asia and China. The Company's shares are traded on the Toronto Stock Exchange under the symbol ATA. Visit the Company's website at www.atsautomation.com.

About M+W Group
M+W Group, with headquarters in Stuttgart, Germany, is one of the leading global companies in the field of high-tech engineering, procurement and construction ("EPC"). From concept development to turnkey solutions, the Group manages projects of all sizes for many industries. Founded in 1912, the company is recognized today as a market leader in several segments, such as the semiconductor and photovoltaic industries. In 2013 M+W Group generated an order intake of 3.03 billion euros and revenues of 2.56 billion euros. More information: www.mwgroup.net.

SOURCE: ATS Automation Tooling Systems Inc.

For further information:
Maria Perrella, Chief Financial Officer
Carl Galloway, Vice-President, Treasurer
519 653-6500

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