Orkla partnered 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), for NOK 15.5 billion (EUR 1.3 billion). 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.
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. 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.
OFI was established by Orkla in 1999 and has since grown nine-fold to NOK 18.1 billion (EUR 1.5 billion) in sales for the 12 months ending 30 September 2023, specializing in ingredient solutions. This growth has been the result of organic expansion and a successful M&A strategy, with over 50 acquisitions across Europe and North America.
When the transaction completes, OFI will replace existing financing from Orkla with a NOK 6.4 billion committed bank facility (not to be fully drawn at closing). Until March 31, 2027, Rhône will have the option to acquire an additional 9% of OFI equity at the same price per share as the current transaction.
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 organization 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.
“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.”
Photo: Orkla website