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HKScan Buys Rose Poultry

by 5m Editor
10 September 2010, at 11:56a.m.

DENMARK - Finnish based meat processor HKScan is to buy Danish poultry processor, Rose Poultry A/S (“Rose Poultry"), which is owned by Vinderup Poultry A/S, Skovsgaard Fjerkræslagteri A/S and Hedegaard A/S.

Rose Poultry, which Denmark’s largest poultry company had net sales of DKK 1.573 billion last year but made a loss of DKK 5 million. In the previous year Rose had a turnover of DKK 1.7 billion and made a profit of DKK45 million.

HK Scan said that the aim is to complete the transaction during the course of this autumn, and closing of the agreement will be conditional on approval by relevant competition authorities.

Upon closing of the transaction, HKScan’s operations in the poultry market will expand to Denmark and Sweden, and the company will become one of the leading players in the poultry market in northern Europe.

Rose Poultry’s strategic suitability for HKScan is excellent and it will constitute an important step in the development of the company's poultry business.

The consumption of poultry meat is continuing to grow globally and in HKScan's market areas. HKScan has a strong foothold in the poultry meat market both in Finland and in the Baltic countries. The company’s poultry meat brand in Finland is Kariniemen and in Estonia Tallegg.

The purchase price for the shares in Rose Poultry is at maximum € 23.9 million subject to certain price adjustment mechanisms.

The purchase price will be paid with a cash payment of at maximum € 15.9 million and a directed share issue of at maximum 1,000,000 HKScan Series A shares to the sellers.

The parties have further agreed that the sellers have a put option pursuant to which during a period commencing 18 months after the closing date and expiring 21 months after the closing date, upon receipt of a sale notice, HKScan will acquire all or part of new HKScan Series A shares at a fixed price of EUR 8.00 per HKScan Series A share.

The interest bearing net debt in the balance sheet of Rose Poultry is an estimated € 47 million. The final purchase price will be specified in conjunction with the closing of the transaction.

The Board of Directors of HKScan has approved the acquisition and decided to use the share issue authorisation granted to it by the Annual General Meeting held on 23 April 2010 for a directed share issue.

The maximum number of Series A shares to be issued represents approximately 2.06 percent of the number of all HKScan Series A shares registered at the time of the decision and approximately 0.64 percent of votes carried by all the company’s shares.

Rose Poultry produces annually more than 130 million kilos of poultry meat, which is sold under the company's own Rose brand as well as under private labels as fresh, frozen or processed products in the company's main markets in Denmark, Sweden and the UK. Rose Poultry has three production facilities in Denmark and the company employs approximately 1,000 people. Rose Poultry’s net sales in the financial year 2008/2009 exceeded EUR 200 million.