Orkla seeks majority in Jotun - offers to buy A shares

Orkla has sent a letter to shareholders in Jotun AS offering to buy their A shares at a price of NOK 70,000 per share. Orkla wishes to increase its exposure in its current core areas. Over a period of almost 40 years, Orkla has been an active minority shareholder, and now wishes to take part in the further development of Jotun as a majority shareholder. Orkla wishes the Gleditsch family to maintain a substantial stake and to continue the close collaboration.
"Jotun is a fine company, and we have never concealed the fact that we wanted a larger stake. Should we become a majority shareholder, Orkla will maintain and strengthen Jotun strategically and operationally along the lines that have been laid down in the past few years, with the clear intention of maintaining the head office in Sandefjord," says Orkla President and CEO, Bjørn M. Wiggen.

Orkla represents continuity and a strong corporate culture, and respects the historical, business and cultural differences between its businesses. Moreover, Jotun's and Orkla's core competencies match substantially in large parts of Jotun's value chain, and there are good examples of synergies between Orkla and Jotun. Jotun has access to important parts of Orkla's training programmes, specialised expertise and some significant purchasing advantages.

"Jotun is Orkla's preferred alternative as the basis for further engagement in the paints and coatings industry. Paints and coatings is considered to be a sector that is well aligned with Orkla's long-term industrial strategy. Jotun's strong brand and market position offer good opportunities for long-term global growth. Orkla has the necessary prerequisites to enable Jotun to position itself in a future consolidation of the sector," explains Wiggen.

There is a considerable difference in the influence inherent in A and B shares in Jotun, as an A share entitles the holder to 10 times as many votes as a B share. Orkla's offer concerns the high-vote A shares, and there is therefore a substantial control premium attached to these A shares.

The offer has been made by Orkla's wholly-owned subsidiary, Lilleborg AS, and concerns the purchase of all the A shares in Jotun AS that are not already owned by Orkla (i.e. a total of 72,019 A shares). The price offered, NOK 70,000 per A share, is payable in cash. Orkla already owns 41,981 A shares and 103,446 B shares in the company, which is equivalent to 42.5% of share capital and 38.2% of the voting rights in Jotun. If Orkla acquires 50.1% of the votes, this will entail a total investment of NOK 1.1 billion. If all the A shareholders accept the offer, Orkla's stake in Jotun will represent 63.6% of the share capital and 90.9% of the voting rights. In such case, the total purchase price will be NOK 5 billion.

Completion of the offer is conditional on, among other things, Orkla acquiring a total stake in Jotun AS, after the exercise of any pre-emptive rights to shares by other shareholders, that represents more than 50% of the voting rights in the company.

The acceptance period expires on 30 September 2011; however, Orkla reserves the right to extend this deadline.
Orkla ASA
Oslo, 31 August 2011


Senior Vice President Corporate Communications and Public Affairs
Johan Chr. Hovland
Telephone +47 22 54 44 86/ +47 917 63 491