Europris — M&A Activity 2018

Jun 18, 2018

Europris and ÖoB creates the leading Nordic discount variety retail platform

Europris and ÖoB creates the leading Nordic discount variety retail platform

Fredrikstad, 18 June 2018 (OSE: EPR): Europris ASA today agreed with

Runsvengruppen AB (ÖoB) to join forces and create a pan-Nordic discount variety

retail platform to drive growth and profitability. Both companies expect to

attain significant synergies from joint sourcing and concept development, to

gain from complementary management resources and know-how, and to benefit from

sharing cost and best-practice experiences in developing e-commerce, e-crm and

automation solutions.

The process of establishing joint sourcing will commence immediately and reflect

the purchasing power of an even larger group through the Shanghai-based joint

venture with Tokmanni in Finland. Alignment of concept and sharing of best

practice will also start immediately. The two companies expect to realise annual

sourcing synergies in the range of NOK 60-80 million on a combined basis from

the purchasing cooperation, with a relatively even distribution of the synergies

between the two companies.

"We bring together two strong players in Norway and Sweden to create the leading

Nordic discount variety retailer. Together we can leverage overlapping

assortments, share deep retail know-how and a common strategic agenda to create

a regional champion and a unique platform for expansion and growth," says Pål

Wibe, the CEO of Europris.

Together, Europris and ÖoB operate 349 stores in Norway and Sweden and had

aggregated 2017 sales of NOK 9.5 billion. Including the joint-venture volumes of

Tokmanni, the new partnership represented combined retail sales of NOK 17.1

billion last year. The new pan-Nordic retailer will be among the top three large

constellations in the discount variety retail sector in northern Europe.

"The Svensson family has owned and managed Runsvengruppen for 70 years. We are

very excited to join forces with Europris to create the strongest Nordic

platform in this growing retail segment. Both companies have highly competent

management teams that will be able to draw upon each other's expertise and

experiences to create   long-term value for all stakeholders," says Oskar

Svensson, Chairman of Runsvengruppen AB.

As part of the agreement, Europris will acquire a 20% equity stake in Skänninge

-based ÖoB with payment in Europris shares. The transaction pricing is based on

a fixed multiple of 7.7x ÖoB's 2018 EBITDA. Europris will issue a formal vendor

note to ÖoB, which will be exchanged for shares in Europris when the 2018 EBITDA

has been finalised. Europris holds an option to acquire the remaining 80% of the

shares of ÖoB in 2020 at the same multiple, also with payment in Europris

shares. Assuming Europris' current share price and achievement of ÖoB's budgeted

2018 EBITDA, the current owners of ÖoB are expected to hold an ownership stake

of 4.5% in Europris following the initial acquisition of a 20% equity stake in

ÖoB.

Europris and ÖoB will continue to operate as two separate companies with

separate brands and corporate managements.

"We are two companies that complement each other and the management teams are

well aligned on key focus areas and factors for growth. We have a shared vision

of how to reach our customers with the best possible mix of categories, as well

as with effective seasonal and campaign development. We look forward to working

together, sharing best practices and to attain economies of scale in daily

operations and by jointly developing new solutions to improve our customer

offerings," said Fredrik Söderberg, CEO at ÖoB.

Transaction details

The transaction involves the initial acquisition by Europris of a 20% equity

stake in ÖoB, as well as the immediate initiation of joint purchasing. As part

of the agreement, Europris has secured an option to acquire the remaining 80%

stake in 2020. The pricing at both stages is based on an EV/EBITDA multiple of

7.7x, based on ÖoB's 2018 EBITDA for the initial 20% equity stake, and the

average EBITDA for 2019 and 2020 for the remaining 80% equity stake. The

exchange to Europris shares will in both cases be a function of a volume

weighted average price for a defined period after EBITDA has been finalised.

Europris will nominate one representative to the board of directors at ÖoB. As

part of the agreement, Europris will propose to its next AGM that one

representative of ÖoB is elected to the board of Europris.

Runsvengruppen is a privately held company, fully owned by members of the

Svensson family. Business activities include procurement, warehousing and

logistics in addition to the commercial operations. ÖoB had revenue of SEK 3.9

billion for the full year of 2017 and a net loss of SEK 8.8 million. Total

assets as at 31 December 2017 amounted to SEK 1.1 billion and total equity was

SEK 388 million.

Please find a presentation related to the agreement enclosed.

CEO Pål Wibe and CFO Espen Eldal will present the agreement at 9:30 CET at the

Felix Conference Centre, Bryggetorget 3 in Oslo. Investors, analysts and other

interested parties are welcome to attend. The presentation will also be

available as a live webcast with Q&A at www.europris.no/corporate.

For further information, please contact:

CEO Pål Wibe, tel.: +47 99 11 98 91

CFO Espen Eldal, tel.: +47 48 29 24 24

About ÖoB:

Runsvengruppen AB is one of Sweden's leading companies in the low-price market

segment. The company owns and operates 94 shops and department stores throughout

Sweden and has a total of 1,800 employees. The company was founded in 1947 by

Rune Svensson and is today owned by the second and third generation of the

Svensson family. The company's headquarters and central warehouse is located in

Skänninge, Sweden. The company's board of directors consists of Oskar Svensson

(Chairman), Joakim Svensson, Göran Sällqvist, and Bjarne Mumm. The company's CEO

is Fredrik Söderberg.

About Europris:

Europris is Norway's largest discount variety retailer by sales. The company

offers its customers a broad assortment of quality owned brands and brand name

merchandise. The company's merchandise is sold through the Europris chain, which

consists of a network of 255 stores throughout Norway. 215 stores are directly

operated by the company and 40 operate as franchise stores. The company's

headquarters are located in Fredrikstad, Norway.

This information is subject of the disclosure requirements pursuant to section 5

-12 of the Norwegian Securities Trading Act and section 3-4 of the Oslo Stock

Exchange continuing obligations for listed companies.