DEUTZ (0E4K) M&A Announcement September 02, 2025 04:30 AM ET Company ParticipantsSebastian Schulte - CEO & ChairmanConference Call ParticipantsNone - AnalystOperatorGood morning, and welcome to conference call on the acquisition of Sobek Group. Please note that this call is being recorded, and a replay will be available on deuts.com later today. By participating in this call, you are consenting to this. I'm pleased to welcome Doet's CEO, Sebastian Scholter, and CFO, Oliver Neu. So Sebastian will provide an ...

Summary of DEUTZ Conference Call on Acquisition of Sobek Group Company and Industry Overview - **Company**: DEUTZ AG - **Acquisition Target**: Sobek Group - **Industry**: Defense, specifically focusing on unmanned aerial vehicles (UAVs) and dual-use technologies Key Points and Arguments 1. **Acquisition Purpose**: DEUTZ aims to strengthen its defense business through the acquisition of Sobek, a specialist in drive systems for drones and other applications, with a strong focus on military use [3][4] 2. **Market Growth**: The European NATO defense budgets are experiencing a significant compound annual growth rate (CAGR) since 2022, driven by geopolitical changes, with expectations of continued growth [6][7] 3. **Shift in Defense Spending**: There is a notable shift from traditional defense companies to tech-focused defense companies, particularly in the UAV sector, with drones expected to play a crucial role in future military operations [7][8] 4. **UAV Market Growth**: The European UAV market is projected to grow at a CAGR of 23% until 2030, with a focus on small and mid-sized UAVs that are essential for modern defense strategies [9][10] 5. **Sobek's Position**: Sobek is an established and profitable company with a revenue range of €10 million to €12 million annually, primarily serving the motorsports and defense sectors [14][15] 6. **Defense Revenue Share**: Currently, approximately 50% of Sobek's revenue comes from military drones, with expectations for this share to increase significantly in the coming years [51][66] 7. **Technological Edge**: The acquisition is expected to provide DEUTZ with a technological edge in advanced drive systems and access to new defense ecosystems [27][66] 8. **Local Supply Chains**: Sobek's German manufacturing setup offers resilience in the supply chain, which is critical for military applications [23][24] 9. **Financial Aspects**: The acquisition was negotiated at an EBITDA multiple of 11x, which DEUTZ considers favorable compared to higher valuations in the defense sector [30][74] 10. **Future Growth Plans**: DEUTZ aims to grow its defense business unit significantly over the next few years, targeting a revenue of double-digit millions in military business [38][66] Additional Important Insights - **Integration Strategy**: DEUTZ plans a low-touch integration approach to maintain Sobek's entrepreneurial dynamics and scalability [31][32] - **Market Positioning**: DEUTZ is transitioning from a traditional internal combustion engine business to a multi-business company, including a focus on defense technologies [28][29] - **Cross-Selling Opportunities**: There are expectations for cross-selling opportunities with existing products and traditional customers [30][39] - **Future Market Potential**: The defense unit is expected to grow but will not dominate DEUTZ's overall revenue in the near term [38][66] This summary encapsulates the key points discussed during the conference call regarding DEUTZ's acquisition of Sobek and the strategic implications for the company's future in the defense sector.