Uster Technologies Ltd., a manufacturer of quality measurement and certification products for the textile industry, announced that it has raised 43.9 million Swiss francs and broadened its shareholder base thanks to a new strategic investor, Japan-based Toyota Industries Corp. Uster believes the transaction should strengthen its financial and operational flexibility, and says it also "represents a strong strategic endorsement of the company's market position by a major global industrial group offering synergies and new joint business development opportunities."

Toyota Industries Corp. was founded in 1926 to manufacture and sell weaving machines. Over the years, Toyota has added other textile machinery as well as automobiles, material handling equipment, electronics, and logistics solutions to its scope of business. Uster issued 1.9 million new shares with a par value of 9.40 Swiss francs each from its authorized share capital. After the transaction, the new shares represent 22.5 percent of the outstanding share capital.

Flexibility

"The proceeds of the transaction of 43.9 million Swiss francs will primarily be used to improve the balance sheet by reducing debt positions and to further invest in product and market developments," Uster stated. The new funds are said to provide the company with additional financial flexibility to ensure the build-up of market volume back to levels achieved in 2007. The main reason for this partnership was to reduce the debt and therefore reduce loan costs. The trigger for the capital increase was the so-called "uncomfortable balance sheet and shortage of cash." Uster looked up to various options, even among its own major shareholders and checked different possibilities. Finally, it was determined that Toyota would be the ideal strategic investor. Toyota will make an important investment in Uster technologies and is convinced that "Uster is a reliable and valuable partner for a promising future."

Stronger partners

In a telephone conference call, Dr. Geoffrey Scott, CEO, Uster Technologies, said he is "delighted to have Toyota Industries Corporation invest in Uster Technologies Ltd. as a new, long-term and strategic shareholder.

"The new investor is said to be the best partner for a long-term strategy in the best interest of Uster and its shareholders. Both companies are in a leading position in their market environment, and the transaction will further strengthen both partners. Toyota, as Scott mentioned, is the partner of choice because both companies are highly committed to quality. Under a lock-up agreement, Toyota is bound to hold the new shares for a period of 12 months following issuance of the shares.

In acknowledgement of the size of the investment and in order to strengthen the strategic cooperation, it will be proposed for approval at Uster's Annual General Meeting in March 2010 that a representative of Toyota will join Uster's Board of Directors.

Synergies

One may question the synergy potential of such a partnership. It must be noted that Toyota is working not only in the sector of weaving machines but also in spinning preparation. This, said the management of Uster, will bring new synergies for both partners. There are also plans for Uster to move toward the development of products for the weaving sector.

Tetsuro Toyoda, president, Toyota Industries Corp., said this investment in Uster "establishes a basis for us to further develop Toyota Industries Corp.'s business opportunities."

He believes in Uster's strong market position and is "pleased to have been given the opportunity to invest in a highly profitable company with an excellent technology and a product portfolio [with an] outstanding quality management system."