UPDATE: Orkla Offers To Buy Jotun A Shares, Seeks Majority
31 August 2011 - 11:37PM
Dow Jones News
Norwegian conglomerate Orkla ASA (ORK.OS) Wednesday said that
its wholly owned subsidiary Lilleborg AS was seeking a majority
stake in paints producer Jotun AS in a potential deal worth up to 5
billion Norwegian krone ($932 million).
Orkla said it was seeking to buy A shares at a price of
NOK70,000 a share in cash. If all the A shareholders accept the
offer, Orkla's stake in Jotun would be 64% of the share capital and
91% of the voting rights. If all the A shares are tendered, the
total purchase price would be NOK5 billion.
Orkla already owns 41,981 A shares and 103,446 B shares in
Jotun, equivalent to 42.5% of share capital and 38.2% of the voting
rights. An A share in Jotun entitles the holder to 10 times as many
votes as a B share.
The company said it has been an active minority shareholder in
Jotun for nearly 40 years and wished to take part in the further
development of Jotun as a majority shareholder.
Jotun is still in the hands of relatives to its founder Odd
Gleditsch. The Gleditsch family today owns 54% of the share capital
and about 59% of the votes in Jotun.
Jotun Chairman Odd Gleditsch, a descendant of the founder, told
Dow Jones Newswires that the Gleditsch family was intent on being a
long-time owner in the company.
"My view is that it is highly unlikely that the bid will
succeed," he said, but declined to say why.
The offer is conditional on Orkla acquiring more than 50% of the
voting rights in the company. Orkla said it still wants the
Gleditsch family to maintain a substantial Jotun stake and to
continue close collaboration.
"We believe this is a good offer," said an Orkla spokesman. "It
comes to every branch of the family to decide what they want to do
with their shares. We hope they will decide to sell to us."
Analyst David Hallden at UBS said the offer might disappoint
some investors who had expected Orkla to use its balance sheet to
pay out more cash to its shareholders.
"I have been trying to play this down," said the analyst and
added that it is positive that Orkla invests in growth instead of
increasing dividends.
The acceptance period expires on Sept. 30. Orkla reserves the
right to extend this deadline.
At 1239 GMT, Orkla shares were flat at NOK44.31.
-By Katarina Gustafsson, Dow Jones Newswires +46-8-5451-3097;
katarina.gustafsson@dowjones.com
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