Orkla ASA — M&A Activity 2017

Jul 10, 2017

Orkla ASA: Orkla to sell its interest in Sapa to Hydro

Orkla ASA: Orkla to sell its interest in Sapa to Hydro

Orkla and Norsk Hydro ("Hydro") have entered into an agreement whereby Hydro is

to purchase Orkla's 50% interest in Sapa. The sale is in line with Orkla's

strategy of being a leading branded consumer goods company.

Since the establishment of the joint venture company Sapa ("Sapa JV") in 2013,

the company has more than tripled its profit and become the world's leading

manufacturer of extruded aluminium profiles, with a turnover of NOK 53 billion

and 22,400 employees. The joint venture agreement originally formed between

Orkla and Hydro contained provisions stipulating joint ownership for at least

three years.

"After more than three years of successful partnership, this is now an

appropriate time for Orkla to turn over ownership to Hydro. The establishment of

Sapa JV has been a success story, and with Hydro as owner, Sapa will have a good

industrial platform for further development. For Orkla, the sale is a natural

consequence of our strategy of becoming a focused branded consumer goods

company," says Orkla President and CEO Peter A. Ruzicka.

The parties have agreed on a purchase price that values Sapa at a total of NOK

27 billion (on a debt-free basis). The final purchase price will be determined

on the basis of the statement of financial position as of the date of

completion. The purchase price will be paid in cash at completion.

Orkla has been a shareholder in Sapa since 2005. When Sapa JV was established in

2013, Gränges was spun off and subsequently listed on the Stockholm stock

exchange at a total sales value of approximately NOK 5 billion. At the time Sapa

JV was established, Orkla received a cash settlement of NOK 1.8 billion. For

2016, Orkla has received an ordinary dividend of NOK 1.5 billion. Orkla thus

expects to realise a total value of more than NOK 20 billion from its original

investment in Sapa.

Today's transaction entails a gain of approximately NOK 5 billion for Orkla.

Under Norwegian tax law, this gain generates no tax liability.

The Board of Directors of Orkla will propose that a special dividend of NOK 5

per share be paid out after the agreement is completed. The Board proposes that

the special dividend be approved and paid out as soon as practically possible

after completion of the agreement with Hydro.

Even after payment of the special dividend, Orkla will have a very solid

financial platform that will provide a foundation for both continued growth and

good dividend capacity. In line with Orkla's capital allocation strategy, the

first priority is to strengthen the Branded Consumer Goods business through

acquisitions and investments in existing operations.

The agreement is subject to the approval of relevant competition authorities,

including the EU, China, Brazil, Canada and Turkey, and is expected to be

completed in the course of 2017.

More detailed information on Sapa, including on the company's Board of Directors

and executive management and key figures, may be found in the separate

attachment. Further information on the transaction and its significance for

Orkla is also included in the separate attachment.

A telephone conference will be held in English for investors and analysts today,

Monday, 10 July 2017 at 10.00 a.m. CET. Participants are invited to call the

following telephone numbers:

From Norway: +47 21 56 33 18 (password: Orkla)

For international callers: +44 (0) 20 3003 2666 (password: Orkla)

A replay of the telephone conference will be made available on Orkla's website

shortly after the call.

Orkla is a leading supplier of branded consumer goods and concept solutions to

the grocery, out-of-home and bakery markets in the Nordics, Baltics and selected

markets in Central Europe and India. Orkla is listed on the Oslo Stock Exchange

and its head office is in Oslo. In 2016, the Group had a turnover of

approximately NOK 38 billion, and 18,000 employees at year end.

Orkla ASA

Oslo, 10 July 2017

Ref.:

SVP Investor Relations

Mattias Orrenius

Tel.: +47 983 66 334

E-mail: mattias.orrenius@orkla.no

Group Director Corporate Communications and Corporate Affairs

Håkon Mageli

Tel.: +47 928 45 828

E-mail: hakon.mageli@orkla.no

This information is subject to the disclosure requirements pursuant to section

5 -12 of the Norwegian Securities Trading Act.