(Finance) – KME SE, subsidiary of KME Groupsigned a non-binding letter of intent relating to the special products business conducted by Cunova GmbH, of which KME SE, in January 2022, had transferred control (55% of the share capital) to the German investment fund The Paragon Fund III GmbH & Co. geschlossene Investment KG (“Paragon”).
KME SE, Paragon and SDCL EDGE Acquisition Corporation, an acquisition vehicle listed on the NYSE, where it raised $200 million, signed a non-binding letter of intent relating to a potential business combination between Cunova and SDCL EDGE.
The LOI provides that upon completion of the Business Combination: a newly formed English holding company has obtained listing on the NYSE; Paragon collects all the liquidity deriving from the sale; and KME SE does not receive liquidity, but converts the stake held in Cunova into the new listed shares, further increasing its stake through the contribution of its aerospace business. It is an engineering business that has many similarities and potential synergies with Cunova’s special products business; as a supplier of the main international private operators in the aerospace sector, it has significant future growth prospects in line with those of the reference sector.
Based on the LOI, it is expected that upon Closing of the Business Combination KME SE will hold a majority stake of approximately 51% in the share capital of the combined entity listed on the NYSE (equal to approximately 46% fully diluted following the possible exercise of the private and public warrants issued by SDCL EDGE).
The Business Combination has an important strategic value for the KME group, because it makes it possible to reacquire the majority of the special products business, increasing its potential through the contribution of the aerospace business, with the result of holding control of a business with highly relevant from a strategic point of view.
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