Investment process

Creaspac is expected to acquire a target company with approximately SEK 2-5 billion in enterprise value (excluding indebtedness). Creaspac’s acquisition strategy is not to acquire companies active in oil, gas, coal, tobacco, alcohol, weapons, real estate, betting, advanced biotechnology, mining or companies whose value is largely dependent on commodity prices or other exogenous macro factors, nor companies that are exposed to significant political or regulatory risk, however, Creaspac’s strategy is not limited to acquiring a company in one or a few specific industries or sectors either.

Identification

Creaspac’s sponsor Creades will provide services from its investment organisation, primarily consisting of Creades’ employees, (see more below under “Organisation – Investment organisation”), who will work daily, on behalf of Creaspac, with a clear and systematic method, to identify potential target companies based on the acquisition strategy. Both Creades and Creaspac’s board of directors have a broad network consisting of, among others, owners, contractors, senior executives of listed and unlisted companies, consultants and other transaction advisers, who can be used to identify potential target companies. The investment-related advisory services that Creaspac has commissioned Creades to perform are not on an exclusive basis, and therefore Creaspac may also enter into agreements with other transaction advisers regarding the identification and assessment of investment objects.

Creades’ investment organisation has extensive experience of investing in the Swedish market. Investment proposals are largely generated internally through proactive work, but many proposals also come from contractors, business intermediaries, investment banks and from others in the network. Creaspac’s board will also actively participate in this work. The desire is to carry out investment discussions in bilateral/exclusive dialogues, and on occasion participate in auction procedures/structured processes.

Evaluation

An acquisition decision in Creaspac will be preceded by a detailed analysis of a potential investment in terms of, among other things, the current profitability, competitive situation and future prospects of the object. The analysis is carried out by the investment organisation and Creaspac’s management, and will be continuously followed up by Creaspac’s board which is actively involved in the investment organisation’s work and results.

The analytical work includes, among other things:

• Review of the company’s financial and operational results;
• Comparison between the company’s financial and operational key ratios with competitors and companies with similar strategic conditions;
• Interviews with, for example, customers, suppliers, former employees and industry experts;
• Analyses of market conditions and legal aspects; and
• Identification and evaluation of projects/measures that can increase the company’s competitiveness.

Transaction and decision-making process

If the analysis above results in the proposal having attractive potential for returns and is, or will be prepared to meet relevant listing requirements, the analysis will be presented formally to Creaspac’s board. The board of directors will then evaluate the proposal and if the board of directors determines that the acquisition, including the transaction structure, represents an attractive opportunity that meets the applicable investment criteria, the board of directors will decide that the transaction should be completed. The board of directors may also decide that an in-depth review of the proposal shall be made before final negotiations are made.

After negotiations, the draft decision will be presented to the board of directors again and the board will then decide whether or not to enter into an acquisition agreement. If a decision is made to conclude an acquisition agreement, the board must also convene an extraordinary general meeting of Creaspac to propose that the general meeting approve the completion of the acquisition and otherwise prepare in order to be able to complete the acquisition, including initiating a review process at Nasdaq Stockholm or Nasdaq First North Growth Market. When the board decides to conclude agreements on the acquisition, a majority of the independent board members must vote in favour of this decision. Decisions are then taken by the general meeting by simple majority. At the same general meeting, the intention is also that the Nominating Committee of Creaspac must submit proposals for any changes to the board in order to appoint persons with the competence and experience required for the business intended to be acquired, provided that the acquisition is approved and completed.

Structure of acquisition and financing

When conducting an acquisition, Creaspac intends to acquire 100 percent of the target company. Creaspac will primarily use available liquidity in the form of deposited funds to finance the acquisition. Depending on the financing need at the time of the acquisition, the board will assess alternative sources of financing based on the conditions at the time in the individual case in the form of external debt financing and/or raising additional equity upon the acquisition. It is essential for Creaspac that the acquired company’s and Creaspac’s joint debt ratio is at a level that creates conditions to develop the business and also under challenging conditions to run the business without having to raise additional capital.

Creaspac may also carry out an acquisition with financial resources partly consisting of newly issued shares, meaning that the seller or sellers receive an ownership in Creaspac, alternatively carrying out a new issue of shares with preferential rights or a directed cash issue to provide the Company with additional capital.