ICA Group: Shares up at the ICA in new turn choose to sell Norway – Dagens Industri

ICA Group: Shares up at the ICA in new turn choose to sell Norway – Dagens Industri

 (SIX) ICA Group struck on Monday morning with a surprising
  information – they sell all ICA Norge Coop Norway instead of
  wait for the Norwegian Competition Authority’s final statement about
  purchasing cooperation with Norway Group.
  
     While shares opened higher, there has been a press conference
  during which the ICA leadership rejected any doubt as to the new
  competitive deal should be approved and told a bit more about how
  Group might use resources to get loose.
  
     The time 10:41 on Monday notes ICA Group shares +8.8 percent
  of course 248.10 kronor, while SIX General Index has risen 0.7 percent.
  
  ————————————————– ——————–
  FINANCIAL bits: PURCHASE PRICE 2.8 billion
   ————————————————– ——————–
  
     The purchase price for ICA Norway’s 2.8 billion (Swedish) crowns on
  debt free basis. For it may Coop Norge an activity comprising approximately
  3600 employees and 553 stores.
  
     Once the transaction has been completed will a resulting gain of
  approximately 1 billion to be booked for the ICA Group part.
  For accounting purposes, the ICA Group report ICA Norway
  “Discontinued operations” as of the third quarter.
  
     ICA’s finances may be under the day’s tasks following chart
  before and after the sale:
  
  Table: Key figures for the ICA Group including and excluding ICA Norway
   ————————————————– ——————–
                                    ICA group ICA Group
  M, July 2013 – June 2014 including ICA Norway excluding ICA Norway
  
  Net sales 100,488 84,598
  
  Ebitda 5389 5495
  Operating profit example eo 3.275 3.852
  Operating margin ex eo 3.3% 4.6%
  
  Profit before tax 2896 3525
  Net 2375 3004
  Earnings / share, EUR 11,40 14,53
  
  Cash flow from operations 4206 4475
  
  Net debt June 30, 2014 9084 6500 *
  Net debt / EBITDA June 30, 2014 1.7 1.2 *
  ————————————————– ——————–
  Source: ICA Group
  
   * Net debt by 2014-06-30 adjusted purchase price on a debt free
  base and transaction costs.
  
  ————————————————– ——————–
  ICA leadership has no doubts that the deal, the competition APPROVAL
  ————————————————– ——————–
  
     The new completion of the transaction is subject to approval from
  The Norwegian Competition Authority, the Competition Authority.
  
     Just this authority earlier positions is also
  background to the deal. This is because the proposed ICA Norway
  purchasing collaboration with Norway Group, an actor under the ICA Group CEO
  Per Strömberg is estimated to have around 39 percent of  the market today, got
  a preliminary no from Competition in the spring.
  
     Stromberg says at today’s press conference how the ICA Group ago
  Spring acidic slips evaluated two main tracks for ICA Norway’s future.
  The option chosen was therefore a sale of the entire ICA
  Norway operations, which Stromberg believes is the best solution
  as well as the Norwegian operations of ICA Group’s finances.
  Two options considered was a stripped-down, ICA Norway.
  
    “As you know, we have made huge losses in Norway during a
  long, approximately 3 billion (Swedish crowns) for the last five
  years, “said Strömberg initially during Monday
  teleconference.
  
     According to Stromberg, Coop Norway have a combined market share in
  Norway on 33-34 percent, if one is allowed to buy ICA Norway.
  
     Is there any doubt as to whether  the authority would approve the new
  deal? Not if you believe in the ICA group assessments today in all
  cases.
  
     “In this kind of business looking Competition Authority on competition
  local, sub-market for sub-market. Coop will need to release some
  of the ICA stores we have today and we also have a plan for this …
  We are so confident that you can get around this transaction, “replied
  Strömberg an analyst to a question about how the Competition
  will look at the new transaction.
  
     Life Forhaug, ICA Group Director of Strategy and
  business development, interjected:
  
     “It’s not a question if it will be approved, but how many stores Coop
  will need to dispose of it to be approved, it is our view
  on the whole. ”
  
     Finance manager Sven Lindskog held that the timing is a wise
  some  uncertainty about when the sale can be expected to obtain
  regulatory approval, it can be as well late in the fall as the
  next spring. However, it is “very likely” that ICA Norway will
  remain in the books when the ICA Group reports for the third
  quarter (November 12, SIX note.)
  
     The size of the capital gain of approximately SEK 1 billion will be affected
  not significantly by the timing, says the CFO. Nor
  of any competition requirement of the Coop, as store closings,
  added ICA CEO Strömberg later.
  
  ————————————————– ——————–
  RETAINS NORWEGIAN PROPERTY PORTFOLIO TO MAXIMIZE THE VALUE
  ————————————————–  ——————–
  
     An interesting aspect of the deal is that ICA Group intend to keep
  greater egenägt property portfolio in Norway, which is part of the ICA
  Real Estate.
  
      According to CEO Per Strömberg has these properties, a total of
  market value of about 2.5-3 billion (Swedish) crowns, exceeding
  a total book value of about 2.4 billion.
  
     “Looking further ahead, we will not sit with properties in
  Norway, but there is no process that is started and nothing
  will begin shortly, “clarified Stromberg plans when
  ownership of the properties to be completed by divestitures.
  
     The reason is that they want to get the maximum paid by selling
  under the right circumstances, according to the CEO.
  
   ————————————————– ——————–
  NORWAY-BUSINESS MAY AFFECT FUTURE PLANS AND OBJECTIVES FOR THE REST OF THE GROUP
  ————————————————– ——————–
  
     The significant net debt reduction of approximately 2.5 billion as
  presented in the table above means that the ICA group ports on a
  Net debt / EBITDA ratio of approximately 1.2x. This is far below the current
  long-term goal to be a maximum of 2.0x.
  
     It may therefore come might be necessary for the ICA Group to
  re-invest part of the funds that they receive from Norway affair in
  growth initiatives, announced CEO Per Strömberg. These will then
  not be directed  outside the Swedish and Baltic markets, and “most
  probable “‘s growth initiatives in the Swedish market.
  
     ICA Group, by contrast, in the current situation does not take a position on whether the
  will be no change on the Group’s financial leverage when
  received proceeds from the sale of ICA Norway, said
  CFO Sven Lindskog. Changes of ICA Group’s financial
  goal, however, is not excluded, testified as well as the CFO CEO Per
  Strömberg.
  
  Johan Eklund, +46 31 350 64 87
  mailto: johan.eklund@six-group.se
  www.blogg.six.seSIXNews
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