Varie
Kesko to acquire Onninen and strengthen its position in the building and technical trade
KESKO CORPORATION STOCK EXCHANGE RELEASE 12.01.2016 AT 09.00 1(5)
Building and renovation are becoming increasingly technical and are increasingly often assigned to professionals. Responding to this change taking place in the market is one of the key objectives of Kesko's strategy. The acquisition of Onninen will especially strengthen B2B sales. In the sales of the K-Group's building and technical trade, the share of B2B sales is over 40 per cent and with the acquisition, the share of B2B sales will rise to around 60 per cent.
With the acquisition Kesko's business in HEPAC and electrical product groups will expand significantly and it will be able to provide better service especially to contractor customers. In addition, Kesko will gain new customer relationships from infrastructure and industry customer groups.
Both companies operate in the Baltic Sea Region and Scandinavian markets. After completion, the arrangement will enable Kesko to gain significant economies of scale and synergies.
"People have less time than before to carry out building projects that are technically increasingly demanding and, more than before, they want to buy ready-made building solutions. One of the key objectives of our strategy is to respond to this development. With the acquisition of Onninen we will gain lots of new, top notch expertise and expand into new product lines and new customer groups. Onninen and its strong brand will give Kesko an excellent opportunity to develop and expand sales to business customers. For Kesko, the acquisition of Onninen is a perfect match, and the EUR3.6 billion net sales of Kesko's building and technical trade will make it one of the leaders in the field in Europe and the most international trading sector operator in Finland," says Kesko's President and CEO .
Onninen is one of the leading providers of HEPAC and electrical products and services in the Baltic Sea Region and Scandinavia. The group specialises in B2B trade and has around 150 units in Finland, Sweden, Norway, Poland, the Baltic countries and Russia. The business to be acquired from Onninen employs around 3,000 people, around 1,200 of whom work in Finland. The company's steel business and Russian subsidiary are excluded from the acquisition.
, Chair of the Onvest Board, sees the acquisition as a good solution for Onninen. "This is a significant transaction. The combination of Onninen and Kesko will provide the Finnish industry sector with an excellent distribution channel to the international markets. Together the companies will form one of the largest building and technical trade companies in Europe, for which Onninen's technical trade expertise provides a strategically significant competitive advantage. The acquisition will create significant opportunities when we will be able to share the best practices of both companies. At the same time, it is important that Onninen remains in Finnish ownership."
Kesko estimates that the acquisition will generate around EUR30 million in annual synergies at the EBITDA level from 2020 onwards, assuming that the acquisition is completed during the first half of 2016. The achievement of synergies will require both capital expenditures and non-recurring costs. The combined net cash flow impact of synergies is estimated at around EUR25 million positive in 2016-2019.
Economies of scale and synergies will mainly be sought from the use of common customer relationships, from purchasing and logistics, from the development of the store site network, as well as from ICT and administration.
The fair value allocations of the transaction price to net assets are estimated to cause an expense item of around EUR5 million on the first six months.
The transaction will be paid in cash from Kesko's liquid assets and available debt financing reserves.
Estimates of Kesko's future outlook in respect of the acquisition will be given in connection with its completion.
The completion of the acquisition is subject to the approval of the competition authorities and the fulfilment of the other terms and conditions of the transaction. The acquisition is estimated to be completed during the first half of 2016.
*The information in the pro forma income statements and balance sheets is unaudited and derived from Onninen Group's management reporting.
Kesko will hold a briefing on the acquisition today at 11.00 in the auditorium at Ankkurikatu 5, Helsinki (Katajanokka). The briefing can be viewed on webcast at www.kesko.fi.
An English-language audio conference on the acquisition will be held today at 14.30 (Finnish time, EET). The audio conference login is available at www.kesko.fi.
Terho Kalliokoski, President, home improvement and speciality goods trade division, tel. +358 105 320 200, terho.kalliokoski@kesko.fi
Jukka Erlund, Chief Financial Officer, tel. +358 105 322 113, jukka.erlund@kesko.fi
Lauri Peltola, Senior Vice President, communications, corporate responsibility and stakeholder relations, tel. +358 105 322 400, +358 505 705 606, lauri.peltola@kesko.fi
Kesko Corporation
Merja Haverinen
Vice President, Group Communications
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www.kesko.fi
offers comprehensive material and information flow solutions to contractors, industry, public organizations, retailers of technical products and suppliers. The Finnish company, established in 1913, today employs a total of around 3,000 people in its operations in Finland, Sweden, Norway, Poland, Russia and the Baltic countries. In 2014, the group's net sales were EUR1.5 billion. www.onninen.fi
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