The Norwegian group Orkla has recently sold a minority stake in its food and ingredients unit to a global private-equity firm for an enterprise value of Nkr15.5bn ($1.4bn). Orkla Food Ingredients (OFI) will now be 40% owned by Rhône, a PE firm known for its portfolio including coffee giant Illy and business-to-business bakery Baker & Baker.
Last year, Orkla denied rumors about a potential sales process for its ingredients division. OFI, established by Orkla in 1999, reported Nkr18.1bn in sales for the 12 months ended September 2023, with adjusted EBIT of Nkr1.1bn. The food-ingredients unit operates in various categories, such as bakery, pastry, ice-cream ingredients, and plant-based dairy alternatives, and has a presence in 23 countries with over 4,000 employees.
Orkla stated that with the closing of the transaction, OFI will replace its existing financing with an Nkr6.4bn committed bank facility, not fully drawn at closing, without recourse to Orkla ASA. The equity value of OFI on a 100% basis is estimated to be around Nkr6.5bn. Rhône will have the option to acquire an additional 9% of OFI equity at the same price per share as the current transaction until March 31, 2027.
Both Orkla and Rhône will have representatives on OFI’s board of directors, with Øyvind Torpp, Orkla’s executive vice president, leading the board. Johan Clarin will continue as CEO of OFI. Nils Selte, Orkla’s group president and CEO, expressed pride in joining forces with Rhône, highlighting the strategic attributes and strong partnership commitment of the Rhône team. He sees this deal as a landmark for Orkla, positioning OFI for continued organic and structural growth.
“Rhône is pleased to partner with Orkla in this next phase of OFI’s growth. OFI is a market leader across many countries in Europe and North America, and its value-enhancing differentiated regional and local approach to its customer base is commendable,” said Patrick Mundt, managing director at Rhône.
The transaction is anticipated to be completed by the end of the first quarter of 2024, subject to customary closing conditions and relevant authorities’ approvals.
Additionally, Orkla announced its group third-quarter results, revealing a 14% increase in operating revenues to Nkr16.8bn and a 16% rise in adjusted EBIT to Nkr1.8bn. Although OFI experienced a decline in volumes of 1.1% during the third quarter, particularly in the bakery and ice-cream segments, eight out of the twelve portfolio companies reported underlying profit growth.
Lastly, Orkla disclosed that the CEO of Orkla Foods Europe, Paul Jordahl, will step down in November, with Atle Vidar Nagel Johansen temporarily assuming the role. Nagel Johansen has been a member of Orkla ASA’s management team since 2012.
