Confectionery: Cloetta and Leaf to merge

Stockholm / SE. (cab) The Swedish confectionery companies Cloetta and Leaf announced a merger of the two companies. The combined company will take the well established name of Cloetta and become a leading Swedish confectionery company with a strong base in the Nordic region as well as in Italy and the Netherlands. The new Cloetta will manage a portfolio of iconic brands and have pro forma net sales of 5,7 billion SEK and recurring Ebitda of 666 million SEK. Highlights of the merger:

• Strong portfolio of iconic, local, long-established brands including Kexchoklad, Läkerol, Polly, Ahlgrens bilar, Plopp, Malaco and Cloetta in Scandinavia, Jenkki in Finland, Sperlari and Saila in Italy and Red Band and Sportlife in the Netherlands.
• Highly complementary combination of two strong companies, creating a full range of confectionery products by combining Cloetta´s strength in the chocolate segment with Leaf´s leading operations within the sugar confectionery segments.
• Significant value creation potential through strengthened strategic position and improved earnings potential. The merger is expected to be accretive to earnings per share for the shareholders of Cloetta.
• AB Malfors Promotor, Cloetta´s largest shareholder, to invest 545 million SEK in the Transaction, showing its strong commitment to the new Cloetta.
• The remainder of the rights issue connected to the Transaction will be fully underwritten by Malfors Promotor, CVC and Nordic Capital without the charging of customary underwriting commission.
• Significant synergy potential in excess of 65 million SEK annually to be achieved within two years of closing of the Transaction. In addition, Leaf is currently in the process of finalizing a supply chain restructuring program expected to yield another 45 million SEK in annual cost savings as of Q1/2012.
• Leading position in an attractive industry with stable earnings growth and strong cash flows.

It is the intention that Bengt Baron will be CEO and that Lennart Bylock will be Chairman of the Board of Directors of new Cloetta. Bengt Baron is currently CEO of Leaf and has extensive experience in developing consumer brands. Lennart Bylock has a long track record of leadership in executive and board roles. Both Bengt Baron and Lennart Bylock were previously members of Cloetta Fazer´s Board of Directors.

«Cloetta was founded nearly 150 years ago and has since then been deeply rooted in both our business values and local society. Our family, through Malfors Promotor, always has and always will act as a long-term owner in Cloetta. The proposed merger with Leaf should be seen from that perspective. Together with Leaf, we now place ourselves in a bigger context and can together build an even stronger company», said Olof Svenfelt, Chairman of the Board of Directors of Cloetta.

«This merger is a perfect match where we will unite iconic, local brands, from complementary categories with very few overlaps. The new Cloetta will offer a full range of strong brands, and a very strong route to market in the Nordic countries as well as in Italy and in the Netherlands. In an industry where the brand is nearly as important as the taste of the product, this transaction makes both industrial and strategic sense», said Bengt Baron, CEO of Leaf.

«We are delighted to see Cloetta and Leaf come together through this merger – the industrial logic is so compelling and we are proud to have contributed to the creation of a very strong and attractive brands company with exciting prospects», said Hans Eckerström, Partner, Nordic Capital and Peter Törnquist, Partner, CVC.

Leaf is currently owned by CVC and Nordic Capital. Since the acquisition 2005 by CVC and Nordic Capital, Leaf has focused on developing and building brands and improving efficiency. Non-core businesses have also been divested.