NetTest sold by GN to Axcel-led investment consortium

6 January 2003 -- Denmark's GN Great Nordic Group has sold its subsidiary NetTest to a management consortium led by investment firm Axcel Industri Investor.

6 January 2003 -- On 31 December Danish technology group GN Store Nord A/S (GN Great Nordic Group) sold its subsidiary NetTest to a consortium involving a management group led by Danish investment firm Axcel Industri Investor. GN had previously failed to spin off NetTest in an independent listing in 2001 before beginning a divestment process in Autumn 2002.

The market valuation has been set at just DKK1 on a debt-free basis after GN, prior to the takeover, capitalised NetTest with DKK155m (USD1= DKK7.087). Also, GN expects to incur net costs of up to DKK100m to cover restructuring costs, representations etc. GN has also agreed to make the payments of unutilised long-term leases for up to DKK50m. However, the transaction includes an earn-out agreement that may entitle GN to a share of the proceeds of this investment in the event of a future change of ownership.

Axcel says that the new NetTest will divest activities within development and sales of equipment to manufacturers of fibre and cables for optical networks. Separately, GN said that its Optical Production and Laboratory (OPL) division in Beaverton, Oregon, which makes test gear for manufacturers of optical components including DWDM devices, has been sold in a management buy-out.
NetTest will therefore re-focus on the two business areas that were its core competencies until the late 1990s: development and sales of monitoring systems and instruments for network operators.

Axcel's managing director Christian Frigast says: "One of our roles is to contribute to the adjustment processes within companies. This is what we are putting into practice in NetTest, in which the core activities � Instruments and Systems � will be continued as a globally leading enterprise in selected niches.

The Systems business will be based at NetTest's head office in Brøndby, Denmark; the Instruments business in Utica, New York. Axcel says that these parts of NetTest's business are expected to be strengthened due to the fact that the currently limited investments in new networks increasingly call for optimisation of existing networks that need to be capable of handling more traffic.

NetTest's future management will be made up of externally recruited, experienced managers from telecoms and other industries, together with managers from the present NetTest. Kaj Juul-Pedersen, who for a number of years has held executive positions at Ericsson and Telia, will be chairman. Allan J Vestergaard, who managed the sale of telecoms company Cocom to Cisco Systems, will be managing director.

The new company will have about 400 staff, compared to 700 currently and about 1500 a year ago. NetTest's 2001 revenues were DKK2.32bn but Axcel is aiming for a new breakeven of DKK600m. The company hopes to be profitable as early as this year.

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