Orkla
today announced a partnership with
Rhône
, a global private equity firm with a focus on investments in businesses with a transatlantic presence. Investment funds affiliated with
Rhône
will acquire 40% ownership in
Orkla Food Ingredients AS
("OFI"). The transaction implies an enterprise value of NOK 15.5 billion.
Orkla
and
Rhône
expect that the partnership will enable the OFI group to continue on its growth journey. The
Rhône
team has experience in the consumer sector and food and beverage industry through past and current investments. The partnership with
Rhône
aims to build upon and strengthen OFI's existing businesses, with an ambition to create shareholder value through volume growth, margin improvements, capital efficiency and structural growth.
OFI was established by
Orkla
in 1999 and has since grown 9-fold to
NOK 18.1 billion
in sales for the 12 months ending
30 September 2023
with an adj. EBIT of
NOK 1.1 billion
. OFI has become a leading food ingredients solutions provider in
Europe
, spanning a range of categories from bakery, pastry and ice cream ingredients to plant-based dairy alternatives for consumers. This growth has been the result of organic expansion and a successful M&A strategy, with over 50 acquisitions across
Europe
and
North America
.
By closing of the transaction, OFI will replace existing financing from
Orkla
with a
NOK 6.4 billion
committed bank facility (not to be fully drawn at closing) with no recourse to
Orkla ASA
, containing net debt to EBITDA and interest cover covenants. In addition, OFI's balance sheet will contain a subordinated long-term payable to
Orkla ASA
of c.
EUR 89 million
. Inclusive of other adjustment items, the equity value of OFI on a 100% basis is c.
NOK 6.5 billion
.
Rhône
will have the option, exercisable through
31 March 2027
, to acquire an additional 9% of OFI equity at the same price per share as the transaction announced today.
OFI will continue to be consolidated in Orkla's accounts. The net proceeds from the transaction will be used for net debt reduction at
Orkla ASA
and for future investments, including in OFI.
Orkla's
dividend and leverage policies remain unchanged following the transaction. The agreement between
Rhône
and
Orkla
contains customary provisions governing the partnership.
"The partnership search for OFI attracted strong interest. I am proud that we are joining forces with a best-in-class organisation in
Rhône
. The
Rhône
team's partnership commitment and strategic attributes clearly stood out. This is a landmark deal for
Orkla
that puts OFI in a position to continue its organic and structural growth journey. This transaction is an example of the flexibility and value creation ambition that we have sought to create with
Orkla's
new operating model," said
Nils K. Selte
,
Orkla's
President & CEO.
"
Rhône
is pleased to partner with
Orkla
in this next phase of OFI's growth. OFI is a market leader across many European countries and in
North America
, where its differentiated regional and local approach to its customer base is value enhancing. We look forward to partnering with
Orkla
to assist OFI in building on its existing foundation and support OFI's management team in driving the company's continued growth and development over the coming years," said
Patrick Mundt
, Managing Director at
Rhône
.
Orkla
and
Rhône
will both have representatives on OFI's board of directors, which will be led by
Orkla
Executive Vice President Øyvind Torpp.
Johan Clarin
will continue as CEO and manage OFI on the basis of its business plan.
"This transaction is testament to the success, strength and resilience of OFI built over many years. I am very proud that a firm of
Rhône's
calibre has decided to invest in OFI and partner with
Orkla
,"
Johan Clarin
, CEO of OFI, pointed out. He added, "We will now have two strong and capable owners joining forces to develop OFI as a leading ingredients business in
Europe
and
North America
. We look forward to driving continued growth, accelerate our margin expansion and make value creative investments with the support of our shareholders."
The transaction is expected to be completed by the end of the first quarter of 2024, subject to customary conditions to closing, including approvals from relevant authorities.
In connection with the transaction,
BofA Securities
acted as financial adviser to
Orkla
and
Rothschild & Co
acted as financial adviser to
Rhône
.
Orkla's
President & CEO,
Nils K. Selte
, will make further comments regarding the transaction and answer questions at today's third quarter results presentation.
About
Orkla
Orkla
is a leading industrial investment company focusing on brands and consumer- oriented companies. The current investment portfolio comprises 12 companies in areas such as paints and coatings, foods, confectionery and snacks, health and food ingredients, among others. In 2022,
Orkla
had operating revenue of
NOK 58.4 billion
and net profit of
NOK 5.3 billion
.
Orkla's
portfolio companies have more than 30,000 employees.
Orkla
is listed on the
Oslo Stock Exchange
and the headquarter is in
Oslo
.
About OFI
OFI was established in 1999 and is present in 23 countries with over 4,000 employees across its footprint. Today the business is organised in three clusters. Bakery Ingredients makes up about 63% of OFI's operating revenue, consists of both production and sales and distribution, and spans a broad range of bakery ingredients categories. Sweet Ingredients, representing about 21% of OFI's operating revenue, has grown into a market leading supplier of ice cream ingredients across several customer channels and value- adding confectionery ingredients to industrial customers. Plant Based generates about 17% of OFI operating revenue and is a regional leader within margarine and dairy alternative products.
About
Rhône
Rhône
, established in 1996, is a global private equity firm with a focus on investments in businesses with a transatlantic presence.
Rhône's
investment philosophy includes the development of strong, strategic partnerships with the companies in which it invests.
Rhône
has a history of completing corporate carve-out transactions and working with entrepreneur and family-led businesses, and operates across its
London
,
New York
,
Madrid
, and
Milan
offices.
Rhône
has invested in a diversified portfolio of companies including investments in the business services, consumer, and industrial sectors. For more information about
Rhône
, its investment professionals, and its current portfolio, please visit: https://www.rhonegroup.com/.
Orkla ASA
Oslo
,
26 October 2023
Contacts
EVP Communication and Corporate Affairs,
Orkla ASA
Håkon Mageli
, Tel.: +47 928 45 828
SVP Investor Relations,
Orkla ASA
Kari Lindtvedt, Tel.: +47 950 75 114
For
Rhône
:
Brunswick Group
Alex Yankus
/
Harry Mayfield
RHONE@brunswickgroup.com
(917) 818-5204 / (917) 200-1539
This information is considered to be inside information pursuant to the EU Market Abuse Regulation and is subject to the disclosure requirements pursuant to Section 5-12 the Norwegian Securities Trading Act.
This
stock exchange
announcement was published by Kjetil Sørum, VP Investor Relations at
Orkla ASA
, on
26 October 2023
at
06:53 CET
.
https://news.cision.com/orkla-asa/r/orkla-announces-ofi-partnership-with-rhone,c3862470
