Ratos AB: Initial public offering for Arcus

18 November 2016

Not for disclosure, distribution or publication, directly or indirectly, in or into the US, Australia, Canada or Japan.

Arcus and Ratos have decided to proceed with the plans for a stock exchange listing and to diversify ownership in Arcus through the issue of new shares and sale of existing shares (the "Offering"). Ratos and other shareholders, including HOFF SA, comprise the "Selling Shareholders" and intend to divest approximately 36%-65% of the existing number of shares in Arcus ASA (the "Company"). The price range for Arcus shares is NOK 39-45 per share. The Company's board has resolved to apply for a listing of the Company's shares on the Oslo Børs and the first day of trading is expected to be 1 December 2016.

The Offering in brief:

• The price per share under the Offering will be set within the indicative range of NOK 39-45 per share, corresponding to a market capitalisation for the total number of shares in Arcus following the completion of the listing of between NOK 2,725m and NOK 3,025m, of which the value of Ratos's shareholding is between
  NOK 1,625m and NOK 1,875m.
• The Offering comprises between 35,326,240 and 37,975,812 shares, depending on the final price per share, of which up to between 17,222,222 and 19,871,794 shares are to be issued by the Company and up to 18,104,018 existing shares offered by Ratos (13,900,000 shares), HOFF SA (1,648,500 shares) and other co-investors (2,555,518 shares). The Offering will generate gross proceeds for Arcus totalling NOK 775m.
• Ratos has retained the right to Up-size the number of shares that Ratos will sell as part of the Offering by a maximum of 7,595,162 shares, corresponding to approximately 11% of the total number of new shares in the company.
• To cover any over allotment in connection with the offering, Ratos has also undertaken to sell a further maximum of 6,835,646 shares (the "Green Shoe option"), corresponding to not more than 15% of the number of shares in the Offering, provided that the Up-size option is exercised in full.
• Provided that the Up-size option and Green Shoe option are exercised in full, the value of the Offering will amount to between NOK 2,044m to NOK 2,194m and correspond to up to 75% of the total number of shares in Arcus following completion of the listing.
• The Offering is aimed at the general public in Norway, to institutional investors and to the company's employees.
• The application period for the general public in Norway is expected to extend from 21 November 2016 until 29 November 2016. The application period for institutional investors is expected to extend from 21 November 2016 until 29 November 2016.
• The estimated first day of trading in Arcus shares on Oslo Børs is 1 December 2016.
• The prospectus including the complete terms and conditions, and application forms are expected to be published on Monday 21 November 2016 at www.arcus.no, www.abgsc.no, www.seb.no and www.carnegie.no.

Mikael Norlander, Investment Director Ratos, comments:
"Over eleven years of ownership, Arcus has developed from a Norwegian spirits producer into the Nordic region's leading supplier of wines and spirits. Numerous value-creating strategic initiatives have been implemented with a focus on increasing growth, broadening the customer offering, increasing the numbers of brands and raising production efficiency. Arcus now has a stable platform with continued development potential. Given its strong, well-known brands, such as Aalborg Akvavit, Linie Aquavit and Gammel Dansk, in our assessment, Arcus is a Nordic consumer goods company that is well-suited to a stock-exchange listing and that the timing is right for such a listing."

Kenneth Hamnes, CEO of Arcus, comments:
"A stock-exchange listing fits well to support Arcus' continued growth. We have many strong consumer brands and we are now starting to realise the results of the change initiatives that we have pursued over the past few years, and we look forward to continued growth as a listed company."

Michael Holm Johansen, Chairman of Arcus, comments:
"I am highly impressed by the work that Arcus's employees and management team have done in delivering on our strategic goals and in building the Company's current strong market positions. There continues to be substantial potential for the Company and I look forward to welcoming new shareholders aboard through the planned IPO."

Financial effects for Ratos
Ratos's exit gain in conjunction with the listing is expected to amount to about SEK 1,350m based on the mid-point of the price range. As a result of this transaction, Arcus will change from a subsidiary to being an associate within the Ratos Group. In accordance with IFRS the entire holding will be revalued based on the listing price. The exit gain will therefore include the realised value of sold shares and the increase in value following revaluation of the shares retained.

Ratos has received more than it initially invested in Arcus. The net investment amounts to about SEK -280m. At the mid-point in the price range, the average internal rate of return (IRR) is about 30% and means that Ratos will have received about 5.5 times its investment (Money Multiple).

Following the listing, Ratos's holding in Arcus will be not less than 19% (after the Up-size and Green Shoe options have been exercised in full) and not more than 41%, if only the base offering is exercised. Ratos currently holds 83% of Arcus.

Background and motive
In 2005, when Ratos acquired Arcus, the company was predominantly a Norwegian spirits producer, which has developed under Ratos's majority ownership into the Nordic region's leading supplier of wines and spirits. In Norway, Arcus is market leader within both wine and spirits and one of the leading companies in the other Nordic markets. The company's best known proprietary spirits brands include Aalborg Akvavit, Gammel Dansk and Lysholm Linie Aquavit. Within Wine, Arcus both has its own brands such as Ruby Zin, and agency operations where the company represents producers such as Masi and Francois Lurton.

Arcus has delivered healthy sales growth over the past 11 years, with an annual growth rate of approximately 11% since 2005.

Ratos's business concept is to acquire and develop unlisted enterprises, and after a number of years to divest the holding when the set goals have been reached. Together with Arcus's current management, Ratos has implemented a considerable number of value-creating initiatives, including a substantial investment in a new production plant at Gjelleråsen in Norway, where production has been consolidated. Now that the majority of the changes have been implemented, Arcus stands on a stable platform with continued potential for both growth and development. Accordingly, Ratos deems this to be an appropriate time to reduce its ownership and the Arcus board considers it appropriate to list the Company. Admission of the Company's shares to trading on the Oslo Børs is expected to promote a strong and diversified shareholder base in the long-term, and since Arcus is a consumer-focused company, the listing is expected to strengthen Arcus's profile in its primary markets.

Prospectus and application forms
The prospectus and application forms for the Offering are expected to be published on Monday 21 November 2016 at www.arcus.no, www.abgsc.no, www.seb.no and www.carnegie.no.

Indicative timetable
21 November - 29 November 2016               Application period for the general public in Norway
21 November - 29 November 2016               Application period for institutional investors
30 November 2016                                     Announcement of the final price under the Offering
1 December 2016                                       First day of trading on Oslo Børs

About Arcus
Arcus is a leading Nordic company within the distribution of wine and spirits and reported revenue of approximately NOK 2.5 billion in 2015. The Company is the world's largest producer of aquavit and holds strong market positions within spirits and wine across the whole Nordic region. The Company's headquarters are located at Gjelleråsen, just outside of Oslo, Norway.

Advisors and additional information
ABG Sundal Collier ASA and Skandinaviska Enskilda Banken AB (publ), Oslo Branch, are acting as Joint Global Coordinators and Joint Bookrunners in conjunction with the Offering. Carnegie AS is acting as Joint Bookrunner. Advokatfirmaet Wiersholm AS is acting as legal advisor to the Company and the Selling Shareholders. Advokatfirmaet Thommessen AS is acting as legal advisor to the Joint Global Coordinators and Joint Bookrunners.

For further information about the listing of Arcus, please see www.arcus.no and www.ratos.se.

For further information, please contact:
Mikael Norlander, Investment Director Ratos, +46 8 700 17 24
Elin Ljung, Head of Corporate Communications, Ratos, +46 8 700 17 20
Kenneth Hamnes, CEO Arcus, +47 922 55 777 

Important Notice

Neither this announcement nor the information contained herein is for publication, distribution or release, in whole or in part, directly or indirectly, in or into or from the United States (including its territories and possessions, any State of the United States and the District of Columbia), Australia, Canada, Japan or any other jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction. The publication, distribution or release of this announcement may be restricted by law in certain jurisdictions and persons into whose possession any document or other information referred to herein comes should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

This announcement does not contain or constitute an offer to sell or a solicitation of any offer to buy or subscribe for any securities referred to in this announcement to any person in any jurisdiction, including the United States, Australia, Canada or Japan or any jurisdiction to whom or in which such offer or solicitation is unlawful. The securities referred to in this announcement have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act"), and may not be offered or sold in the United States absent registration or an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and in accordance with applicable U.S. state securities laws. The Company does not intend to register any securities referred to herein in the United States or to conduct a public offering of securities in the United States.

Any offering of the securities referred to in this announcement will be made by means of a prospectus. This announcement is not a prospectus for the purposes of Directive 2003/71/EC (together with any applicable implementing measures in any Member State, the "Prospectus Directive"). Investors should not subscribe for any securities referred to in this announcement except on the basis of information contained in the aforementioned prospectus. Copies of any such prospectus will, following publication, be available from the Company's registered office and, subject to certain exceptions, on the website of the Company.

In any EEA Member State other than Norway that has implemented the Prospectus Directive, this communication is only addressed to and is only directed at qualified investors in that Member State within the meaning of the Prospectus Directive, i.e., only to investors who can receive the offer without an approved prospectus in such EEA Member State.

This communication is only being distributed to and is only directed at persons in the United Kingdom that are (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order") or (ii) high net worth entities, and other persons to whom this announcement may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as "relevant persons"). This communication must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this communication relates is available only to relevant persons and will be engaged in only with relevant persons. Persons distributing this communication must satisfy themselves that it is lawful to do so.

Matters discussed in this announcement may constitute forward-looking statements. Forward-looking statements are statements that are not historical facts and may be identified by words such as "believe", "aims", "expect", "anticipate", "intends", "estimate", "will", "may", "continue", "should" and similar expressions. The forward-looking statements in this release are based upon various assumptions, many of which are based, in turn, upon further assumptions. Although the Company believes that these assumptions were reasonable when made, these assumptions are inherently subject to significant known and unknown risks, uncertainties, contingencies and other important factors which are difficult or impossible to predict and are beyond its control. Such risks, uncertainties, contingencies and other important factors could cause actual events to differ materially from the expectations expressed or implied in this release by such forward-looking statements.

The Offering may be influenced by a range of circumstances, such as market conditions, and there is no guarantee that the Offering will proceed and that the listing will occur.

Certain figures contained in this document, including financial information, have been subject to rounding adjustments. Accordingly, in certain instances, the sum or percentage change of the numbers contained in this document may not conform exactly with the total figure given.

The information, opinions and forward-looking statements contained in this announcement speak only as at its date, and are subject to change without notice.

Financial calendar from Ratos:
Year-end report 2016                                   17 February 2017

Ratos is an investment company that owns and develops unlisted medium-sized companies in the Nordic countries. Our goal as an active owner is to contribute to long-term and sustainable business development in the companies we invest in and to make value-generating transactions. Ratos's portfolio consists of 21 medium-sized Nordic companies and the largest segments in terms of sales are Construction, Consumer goods/Commerce and Industrials. Ratos is listed on Nasdaq Stockholm and has a total of approximately 16,000 employees.