Harvia Acquires Kirami, Adding Wood-Fired Hot Tubs to Its Portfolio

Harvia Plc announced and closed on 28 May 2021 the acquisition of Kirami Oy, a Sastamala, Finland-based manufacturer of wood-heated and electric still-water hot tubs. The purchase price is EUR 7 million at closing, with a delayed purchase price of up to EUR 4 million payable after three years based on Kirami’s EBITDA performance. Harvia shares traded at an all-time high on the news. Kirami also owns 50% of Estonian production company Metagroupp OU and 51% of Kirami Sweden AB, both included in the transaction. (All Harvia M&A activity, earnings, and stock chart in our Harvia News hub.)

What Kirami adds

Kirami is a family business established in 2001 in Sastamala, Finland, by the current owners CEO Mika Rantanen and CFO Eero Rantanen. The company is the world’s largest manufacturer of wood-heated still-water hot tubs, delivering approximately 10,000 hot tubs per year across Finland and Europe at time of acquisition. In Kirami’s home market of Finland, its still-water hot tubs hold approximately 40% market share. The company’s main product is the wood-heated still-water hot tub, complemented by hot tub accessories, water sanitation products, outdoor saunas, and other products for outdoor living. Kirami has grown fast internationally, especially in Central Europe and Scandinavia.

For Harvia, this is the first acquisition that moves the group beyond pure sauna and heater manufacturing. Wood-fired hot tub buyers overlap substantially with barrel sauna buyers, and Almost Heaven has a ready-made North American dealer channel through which to introduce Kirami product. Harvia management’s stated growth plan for Kirami, however, centered on Central Europe and Scandinavia.

Kirami key financials

Harvia’s 2020 standalone revenue was EUR 109.1 million. Illustrative combined Harvia revenue for 2020 pro forma post-Kirami was EUR 128.6 million with adjusted EBITDA of EUR 31.7 million. Harvia’s net debt increased from EUR 31.9 million at the end of 2020 to EUR 38.3 million post-deal. Equity ratio was 40.4% (from 42.0% pro forma).

Deal mechanics and sellers

Harvia paid EUR 7 million at closing, funded from cash on hand. The earnout structure pays up to EUR 4 million after three years based on Kirami’s EBITDA development (Harvia paid the EUR 2.5 million additional purchase price in December 2023, ahead of the originally scheduled 2024 date, to enable closer Group integration). Kirami continues to operate from its Sastamala facility, consistent with Harvia’s approach to Almost Heaven and EOS. Kirami’s management team is retained; top management committed to working for the company at least three years.

Sellers: CEO Mika Rantanen and CFO/CIO Eero Rantanen, owning a total of 88% of Kirami Oy, plus minority shareholders owning 12%. After the transaction, Harvia owns 100% of Kirami Oy. Harvia advised by Ernst & Young (financial), Borenius Attorneys (legal), Hill+Knowlton Strategies (communications).

Harvia’s four stated goals for the deal

Harvia gave four objectives for the Kirami deal. First, expand the hot tub offering to electrically heated or hybrid still-water hot tubs, combining Harvia’s electrical and water technology expertise with Kirami’s hot tub products. Second, introduce wood-heated still-water hot tubs with cleaner combustion. Third, research the potential of cold water tubs as hot-cold alternation treatments had gained popularity. Fourth, grow Kirami sales further in Central Europe and Scandinavia via Harvia’s distribution network, and cross-sell saunas and hot tubs for modern backyard living.

Annual synergies of approximately EUR 1 million were expected, fully realized by end of 2023, from distribution, sourcing and logistics, and R&D. One-off integration and post-closing costs estimated at EUR 0.4 million over 2021 and 2022.

Harvia is very happy to announce the acquisition of Kirami. The company is an excellent strategic fit to Harvia’s ‘healing with heat’ philosophy, supporting our aim of increasing the value of average purchase, geographical expansion, and improving our productivity. Hot tubs are a new product category for Harvia, and they complement our modern backyard living & wellness offering very well.

The above is Tapio Pajuharju, then-CEO of Harvia. Pajuharju continued: “Combining Harvia’s electrical and water technology expertise with Kirami’s hot tub products and unique expertise provides an additional competitive advantage. Lately, hot-cold alteration treatments have become very popular and Kirami is offering a good platform to further entertain this opportunity.” Kirami’s Mika Rantanen: “Our cultural fit with Harvia is strong, as both companies build on the wellness trend, focusing on high quality and user-friendliness of products as well as continuous innovation.”

From sauna heaters to outdoor bathing

Harvia has moved from pure sauna heaters (core Harvia business), to prefabricated barrel saunas (Almost Heaven), to commercial/premium saunas and infrared (EOS), and now to outdoor bathing more broadly (Kirami). Harvia shares closed at an all-time high the day the deal was announced. Kirami’s wood-fired still-water tubs fit cabin, holiday home, and off-grid installations that are not suited for electrically heated products.