Orion Corporation will acquire the majority holding in Kronans Droghandel AB (KD), Sweden's second largest pharmaceutical distributor, from Ratos AB, a Swedish private equity company, and 3i of England. The deal was concluded on Thursday evening, 11 April 2002. The closing of the transaction is subject to the approval by the competition authorities and to the fulfilment of certain other terms in the agreement. The price of the transaction is approximately EUR 61 million and will be adjusted before the final conclusion of the deal.
The acquired shares represent 58.3% of the total share capital of KD. As Orion Corporation already owns 10.6% of KD, its ownership in KD will rise to about 69 percent. Before the transaction, KD divested its unprofitable Norwegian subsidiary, Holtung as, to the British healthcare distributor Alliance UnicChem Plc, in early April.
The majority ownership in Kronans Droghandel makes a reasonable way for the Orion Group to expand its pharmaceutical distribution business to Sweden. Orion's business division Oriola Oy, Finland's second largest pharmaceutical wholesaler, is already present in Sweden as a marketer of dental care products and has been making preparations during the past year to start also pharmaceutical distribution there.
- With both KD and Oriola in the Group, Orion will have improved capabilities to meet the distribution needs of pharmaceutical companies in Finland, Sweden and the Baltic countries and to offer increasingly qualified product supply services to pharmacies and hospitals, says Seppo Morri, President of Oriola Oy.
- We have acquired the majority in KD in order to establish a strong wholesaling group for pharmaceuticals and other healthcare products for the Nordic region and in order to strengthen Orion's strategic position as a supplier for the healthcare sector, Jukka Viinanen, President and CEO of the Orion Group motivates the solution. He underlines, however, that this does not mean a change in the Group's strategy.
- The core is the Orion Pharma business division and will remain so. The transaction must be rather understood as a means of increasing the ownership value of Oriola and KD within the Group, Mr. Viinanen points out.
Mr. Ralph Nilsson, President of Kronans Droghandel AB regards the arrangement positive in view of KD's future:
- We already know Orion and Oriola well and welcome Orion as a new principal owner of KD. Now that Orion is increasing its ownership, this will strengthen Oriola's and KD's business profile which will give both companies excellent opportunities to compete successfully in their markets with the major European distributors.
KD and Oriola will continue as independent companies, yet making efficient use of their synergies mutually. Orion wants to build up a pharmaceutical and healthcare wholesaling business competitive and financially sound and strong enough for the Nordic area, striving for market leadership in pharmaceutical distribution in Finland and Sweden.
- The core business of Oriola and KD are financially sound and well trimmed operationally. KD is well positioned in Sweden and provides an excellent platform for boosting our medicotechical products business and healthcare logistics on the Swedish market, says Mr. Viinanen. - One of the areas having burdened KD was removed along with the recent divestment of Holtung. As to the new business areas of KD, we shall start by analysing the risks and opportunities before making decisions upon their future development.
Mandatum & Co Ltd acts as sole financial advisor to Orion.
President and CEO
Executive Vice President
Contact persons, available after 11 o'clock Finnish time:
- Jukka Viinanen, President and CEO, Orion Group, phone +358 10 429 3710
- Seppo Morri, President, Oriola Oy, phone +358 10 429 2211
- Ralph Nilsson, President, Kronans Droghandel AB, Mölnlycke, Sweden, phone +46-31-338 70 51
- Arne Karlsson, President, Ratos AB, Stockholm, Sweden, phone +46 8 700 1700
Press Conference in Helsinki on 12 April 2002
at 10.30 a.m. local time
A press conference about the arrangement will be held by Orion in Helsinki today 12 April 2002 starting at 10.30 a.m., at the Hotel Palace, Conference Room, address Eteläranta 10, 10th floor, Helsinki.
Three pharmaceutical distributors and single channel in Finland and Sweden
Wholesaling of pharmaceuticals to pharmacies and hospitals in Finland and Sweden is based on so-called single-channel distribution, which means exclusive availability of the products from one wholesaler only. There are two pharmaceutical wholesalers in Sweden: Tamro (market share 53%), and Kronans Droghandel (47%). In Finland, the market is shared among three players: Tamro (market share 49%), Oriola, which is part of the Orion Group (32%) and KD Tukku, a subsidiary of the Swedish KD (19%). Retail sales of pharmaceuticals in Sweden are the business of the state-owned Apoteket AB, whereas pharmacies in Finland are private enterprises.
Kronans Droghandel AB, founded 95 years ago, is a pharmaceutical wholesaling company based in Mölnlycke, Sweden. The company has a staff of about 460 employees. KD's share of pharmaceutical distribution in Sweden was about 47% in 2001. KD has a subsidiary in Finland, KD Tukku Oy. After the share transaction with Ratos and 3i, Orion's holding in Kronans Droghandel will rise to 69%. MSD and Pfizer are shareholders with 12.5% each. Minor stakes are held by Astra, Organon and Pharmacia, a.o..
Orion is the leading company in Finland specialising in healthcare products. The second largest business division, Oriola, focuses on pharmaceutical wholesaling and distribution as well as on the marketing of equipment and supplies to healthcare providers in Finland and the Baltic countries. In Sweden, Oriola is mainly present with dental care products. The 2001 net sales of the Orion Group came to EUR 970.8 million. Oriola's invoicing volume came to EUR 622.8 million and net sales to EUR 329.3 million.
The full press release including tables can be downloaded from the enclosed link.