Cleanzine: your weekly cleaning and hygiene industry newsletter 2nd May 2024 Issue no. 1112
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Essity completes divestment of its shares in Vinda
Essity has completed the divestment of its entire holding of 51.59% of shares in the Asian hygiene company Vinda International Holdings for HKD 23.50 per share. The sales proceeds amounted to HKD 14.6bn (approximately SEK 19bn).
Essity will retain a presence in Asia and in Vinda through continued licensing of Essity's brands.
"Essity is now in better shape than ever," says Magnus Groth, president and CEO for Essity. "Following the divestment of Vinda, the categories with the highest margins and lowest capital intensity account for a larger part of the company. The company's pulp consumption has halved, and we have a more attractive portfolio with higher profitability and lower volatility.
The transaction reduced Consumer Tissue's share of net sales in 2023 from 41% to 33%. We look forward to continuing to grow a portfolio of more value-generating categories.
Essity's ownership of 51.59% in Vinda had been consolidated to 100% by Essity since 2014. As of the fourth quarter of 2023, Essity has classified Vinda's financial reporting as discontinued operations. Vinda is listed on the Hong Kong Stock Exchange and had a market capitalization of approximately HKD 25bn (SEK 33bn) at the end of trading on December 14, 2023. 83% of Vinda's net sales were related to tissue and 17% to personal care products.
Essity has several legal opinions confirming that the divestment of the shares in Vinda does not constitute a 'cessation of business' under Essity's EMTN program. These opinions considered several qualitative and quantitative factors, such as the continued business with Vinda under licenses, etc. However, already the fact that Essity only owns 51.59% of the shares and sales account for 8.5% of Essity's total sales, means that the divestment of the shares does not qualify as 'cessation of business'.
11th April 2024