Orkla and Volvo have entered into an agreement whereby Orkla will immediately take over Volvos ownership interest in Pripps Ringnes, which will thereby become a wholly-owned subsidiary of the Orkla Group. Pripps Ringnes comprises the companies Pripps in Sweden, Ringnes in Norway and the 50%-owned Baltic Beverages Holding (BBH), which has seven breweries in the Baltic States, Russia and Ukraine. In addition, Pripps Ringnes owns 20.5 % of the Finnish brewery Hartwall, the other owner of BBH.
Volvos 55% interest in Pripps Ringnes is valued at approximately NOK 4 billion on the transaction date. The parties agree that the bulk of the payment will be made towards the end of 1997. The agreement is conditional upon the approval of Orklas corporate assembly. Orkla will not be undertaking an equity issue in connection with the acquisition.
In 1995 Orkla took over the Volvo food companies Procordia Food and Abba Seafood. At the same time, Pripps and Ringnes merged to become the jointly owned beverage company Pripps Ringnes, in which Orkla has so far had a 45% financial interest. Orklas takeover of the rest of Pripps Ringnes marks the final chapter in the takeover of all Volvos food and beverage operations.
The Nordic countries are the natural home market for Orklas branded products. Outside the Nordic countries, the strongest growth will mainly be in niche areas or special geographical areas. Eastern Europe is one such area, where Orkla has been working on several fronts for some time. The full takeover of Pripps Ringnes confirms Orklas position in the Nordic region and gives the Group a strong position in Eastern Europe. The takeover therefore strengthens the Groups branded products business.
Pripps Ringnes is the market leader for beer, mineral water and carbonated soft drinks in Sweden and Norway and owns strong brands in these markets. Early in the 1990s, Pripps and the Finnish brewery Hartwall established the jointly-owned company Baltic Beverages Holding (BBH). BBH is majority owner of seven breweries in the Baltic States, Russia and Ukraine. These breweries have strong local brands in their own markets. In 1997 BBH alone is expected to produce approximately 460 million litres of beer, which is more than the total volume for Pripps and Ringnes combined.
In 1996, Pripps Ringnes (including a 50% share of BBH) had operating revenues of SEK 7,522 million and operating profits from continuing business of SEK 711 million. Profit trends were particularly positive for BBH. In 1996 Pripps Ringnes free cash flow from operations totalled SEK 1,053 million. Pripps Ringnes will be consolidated as a subsidiary in Orklas 1997 accounts.
Pripps Ringnes will continue to be registered in Sweden under its current management and have its head office in Stockholm.
Lisbeth Lindberg, Director Information and Investor Relations,
Bjørn Erik Næss, Chief Financial Officer,
Harald Ullevoldsæter, Controller,
Tel.: +47 22 50 10 80