Klimator acquires business from HedeDanmark
On December 17th, Klimator AB (“Klimator”) enter into an agreement with HedeDanmark A/S (“HedeDanmark”) to acquire HedeDanmark's business operations for digital winter road maintenance for smart cities (“HD Digital”). In combination with the acquisition, the two companies also enter into a strategic partnership regarding Klimator's Road Status Information (RSI) service.
“Our relationship with HedeDenmark has been excellent from the start, and it is therefore fantastic to further strengthen the connection through this agreement. We look forward to continuing the development of our digital decision support business together. In recent years, HedeDanmark has built up an impressive network of sensors, that are now integrated into Klimator's RSI platform, and the combination of our offerings generates a very attractive and modern proposal for smart cities and municipalities, ”comments Torbjörn Gustavsson, CEO of Klimator.
The transaction in brief
The acquisition of HD Digital takes place through a transfer of assets, and Klimator will acquire the business operations of HD Digital for a total of DKK 550,000. Klimator procured the current stock of sensors, software connected to the sensors, an IoT platform, drawings, manuals, equipment and supplier agreements. Klimator also takes ownership of the leases for offices in Odense, with office equipment. In the transaction, key personnel is also included. The transfer is to take place on January 6, 2021.
Furthermore, in the agreement Klimator and HedeDanmark establish closer cooperation, resulting in HedeDanmark gaining exclusive rights to use and distribute Klimator's Road Status Information service on the Danish market.
Specification of HD Digital's operations
HD Digital offers municipalities, government agencies and private actors an overview and in-depth knowledge of areas through accurate measurements of, among other things, human behaviour, flow levels in watercourses and groundwater levels, temperatures and humidity values. HD Digital's product portfolio consists of proprietary sensors for people counting, rain sensors, road sensors for measuring humidity, air temperature and road temperature, ultrasonic transducers for measuring water levels in wells and drains, sensors for measuring water levels and soil moisture.
HD Digital currently has over 1,300 sensors deployed at more than 150 different customers. The business model builds on an initial installation cost with a subsequent subscription of data delivery from the sensors. HD Digital currently has an annual recurring revenue of approximately 2.4 MDKK, with excellent growth potential in the forthcoming years.
The emerging smart cities
Smart cities are emerging as digital tools are used to simplify life for citizens and businesses. The right investments in digital technology can bring great societal benefits by using resources more efficiently and facilitating the planning of preventive measures in the face of, for example, flood risk or anti-slip measures. Multiple investments are done within the domain of smart cities, both internationally and in Sweden. Swedish authorities such as, for example, Vinnova, the Swedish Energy Agency and the National Board of Housing, Building and Planning are running several initiatives to promote the development of smart cities. EU also prioritises the development of smart cities through various initiatives and opportunities for grants. In a recently published report, Research and Markets estimate the value of the global market for smart cities at $1.8 trillion by 2025.
An addition to Klimator's business
Klimator already offers digital services that contribute to the development of smart cities. Klimator's Road Status Information (RSI) service collects data from a variety of sources and processes it with Klimator's advanced climate models to provide high-resolution road weather predictions. These predictions make it possible for winter road contractors to make fact-based decisions about when, where and how actions for snow removal and de-icing are to be performed.
The acquisition of HD Digital complements Klimator's offering for smart cities, creating a base for an all-seasons-covered service. The users of Road Status Information service are also potential users for HD Digital's products, and vice versa. Overall, Klimator's and HD Digital's operations complement each other very well.