Group notes
Note 3 Acquisitions and divestments
ACCOUNTING POLICY
Business combinations
Business combinations are accounted for using the acquisition method. Business combinations are seen as if the Group directly acquires the assets and assumes the liabilities of the entity acquired. At the acquisition date, the date on which control is obtained, each identifiable asset acquired, and liability assumed is recognized at its acquisition date fair value. When the consideration transferred by the Group in a business combination includes a contingent consideration arrangement, the contingent consideration is measured at its acquisition date fair value and included as part of the consideration transferred in a business combination. When a business combination is achieved in stages, the Group’s previously held interests (including associated companies) in the acquired entity are remeasured to its acquisition date fair value and the resulting gain or loss, if any, is recognized in profit or loss. Transaction costs that the Group incurs in connection with a business combination are expensed as incurred as operating expenses.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the Group’s previously held equity interest in the acquiree, if any, over the net of acquisition date fair value amounts of the identifiable assets acquired and liabilities assumed.
Non-controlling interest is initially measured at the non-controlling interest’s proportionate share of the fair value of identifiable net assets. Subsequent profit or loss attributable to the non-controlling interest is allocated to the non-controlling interest, even if it puts the non-controlling interest in a deficit position. Acquisitions of non-controlling interests are recognized as a transaction between owners of the parent and non-controlling interests. The difference between consideration paid and the proportionate share of net assets acquired is recognized in equity.
CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
The valuation of business combinations is based on management assessment of the future earnings of the acquired company. The determination of the fair value of assets and liabilities in connection to a business combination requires the Group to apply assumptions and estimates which can vary from the actual outcomes. Some of the business combinations contain earn-outs which are based on the acquisitions achieving future targets for revenues for a predetermined period. The fair value of earn-outs is reviewed on a regular basis.
Acquisitions 2025
On April 2, 2025, Epiroc acquired the remaining share of Radlink. Epiroc acquired a majority shareholding of Radlink, 53%, already in 2022, and now owns 100%. The business has been consolidated and reported within “Service” since 2022. The transaction of MSEK -355 is reported as acquisition of non-controlling interest included in financing activities. Radlink provides mines with wireless data and voice communication networks and supporting infrastructure to surface and underground mines, vital to support mining automation. The company has approximately MSEK 1 330 in annual revenues and 415 employees. No other acquisitions have been made 2025.
| Fair value (preliminary) of acquired assets and liabilitites | Changes related to acquisitions made before 2025 1) |
|---|---|
| 2025 | |
| Net assets identified | 212 |
| of which: | |
| Intangible assets | 33 |
| Tangible assets | -51 |
| Inventory | -35 |
| Trade payables | -199 |
| Goodwill | -180 |
| Total consideration | 32 |
| Contingent consideration | -56 |
| Net cash outflow | 88 |
1) The changes are related to updated final purchase price allocations for acquisitions completed in 2024, and payout of earn-out related to acquisitions prior years.
Divestments 2025
No material divestments of subsidiaries have been made during the last twelve months. The cash flow effect related to divestment amounts to 1 MSEK.
Acquisitions 2024
All acquisitions described below were made through the purchase of 100% of shares and voting rights or through the purchase of the net assets of the acquired business, except for ASI Mining where the remaining 66% of the shares and voting rights were acquired. Epiroc owned 34% of the shares in ASI Mining (associated company) before the acquisition date. The transaction resulted in a revaluation gain on non-controlling interest of 554 which was recognized in Other operating income. See note 7. From July 3, ASI Mining is a fully-owned subsidiary.
The Group received control over the businesses upon the date of the acquisition. All acquisitions have been accounted for using the acquisition method, no equity instruments have been issued in connection with the acquisitions.
Acquisitions that support profitable growth are a natural part of the strategy and in 2024, Epiroc has completed five acquisitions:
In April, reporting segment Tools & Attachments acquired Stanley Infrastructure, USA, including subsidiaries. The company designs, manufactures, and sells attachments, typically used on excavators, and handheld hydraulic and battery-powered tools for applications in infrastructure, construction, scrap recycling, deconstruction, and railroad infrastructure.
In May, reporting segment Equipment & Service acquired Weco Proprietary Limited, South Africa including subsidiaries. The company manufactures precision-engineered rock drilling parts and provides related repairs and services.
In June, reporting segment Tools & Attachments acquired Yieldpoint, Canada. The company designs, manufactures and sells advanced digital geotechnical instruments and has customers worldwide.
In July, reporting segment Equipment & Service acquired ASI Mining, USA, including subsidiary. The company provides mining automation systems such as remote control, teleoperation, and fully autonomous solutions.
In September, reporting segment Tools & Attachments acquired ACB+, France including subsidiary. The company manufactures attachments and quick couples used on excavators for construction and related areas such as scrap recycling and deconstruction.
The amounts in the following table detail the recognized amounts according to the preliminary purchase price allocations. The amounts are aggregated for four of the acquisitions made during the year, as the relative amounts of these individual acquisitions are not considered significant. The fifth acquisition, Stanley Infrastructure, is reported separately. The purchase price allocations are finalized within twelve months, when all relevant information have been retrieved.
| Fair value (preliminary) of acquired assets and liabilitites | Group recognized values (Total) | Whereof Stanley Infrastructure | Whereof changes related to acquisitions made before 2024 1) |
|---|---|---|---|
| 2024 | 2024 | 2024 | |
| Net assets identified | 4 031 | 3 646 | 6 |
| of which: | |||
| Intangible assets | 3 029 | 2 559 | 2 |
| Tangible assets | 1 269 | 1 125 | – |
| Inventory | 1 092 | 999 | – |
| Trade receivables | 525 | 467 | – |
| Trade payables | 532 | 507 | – |
| Goodwill | 6 094 | 4 334 | -6 |
| Total consideration | 10 125 | 7 980 | -0 |
| Acquired cash and cash equivalents | 120 | 36 | – |
| Revaluation gain on noncontrolling interest in ASI Mining | 554 | – | – |
| Contingent consideration 2) | -207 | – | -633 |
| Net cash outflow | 9 658 | 7 944 | 633 |
1) The changes are related to updated final purchase price allocations for acquisitions completed in 2023, and payout of earn-out related to acquisitions prior years.
2) The contingent consideration consists of paid earn-out and hold-back amounts of -633 and hold-back amounts related to acquisitions in 2024 of 426. The total outstanding earn-out per December 31, amounts to 423, which corresponds to the maximum amount. The change in fair value of earn-out is included in other operating income and other operating expenses
The goodwill recognized on acquisitions is primarily related to the synergies expected to be achieved from integrating these companies into the Group’s existing structure. As of December 31, the acquisitions have a total cash flow effect of -9 025. The earn-out is recognized as a liability at fair value. The payment is dependent on achieving future targets for revenues within two years of the acquisition. The fair value is based on probability-weighted scenarios and is discounted to net present value. According to the preliminary purchase price allocations, total consideration amounts to 10 125. The acquired businesses have contributed to revenues by 2 807 and to operating profit by -3 since their respective dates of acquisition.
CONTRIBUTION FROM BUSINESSES ACQUIRED IN 2024
| MSEK | Total | Whereof Stanley Infrastructure 1) |
|---|---|---|
| Contribution from date of control | ||
| Revenues | 2 807 | 2 635 |
| Operating profit | -3 | -17 |
| Contribution if the acquisition had occured on Jan. 1 | ||
| Revenues | 4 072 | 3 595 |
| Operating profit | -233 | -167 |
1) The revenues were lower 2024 due to weak construction market in USA.
Divestments 2024
No material divestments of subsidiaries have been made during the last twelve months.