Orkla ASA — M&A Activity 2023

Oct 26, 2023

Orkla announces OFI partnership with Rhône

Orkla announces OFI partnership with Rhône

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.