Sweden’s Essity completes divestment of shares in Vinda

March 22, 2024 - Sweden

Essity has communicated that Isola Castle Ltd, a company indirectly wholly owned by Asia Pacific Resources International Limited (APRIL), had announced that it intended to make a pre-conditional public offer to the shareholders of Vinda to acquire 100 per cent of the company’s issued shares for HKD 23.50 per share. Essity signed an irrevocable undertaking to accept the offer in respect of all of its 51.59 per cent shareholding. The offer was announced on March 8, 2024, and Essity has accepted it in line with its undertaking. The price in the public offer will correspond to an equity value for all shares of approximately HKD 28.3bn ($3.62 bn).

“Essity is now in better shape than ever. 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 per cent to 33 per cent. We look forward to continuing to grow a portfolio of more value-generating categories,” said Magnus Groth, president and CEO for Essity.

Essity’s ownership of 51.59 per cent in Vinda had been consolidated to 100 per cent 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 capitalisation of approximately HKD 25bn ($3.20 bn) at the end of trading on December 14, 2023. 83 per cent of Vinda’s net sales were related to tissue and 17 per cent to personal care products, the company said in a press release.

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 programme. 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 per cent of the shares and sales account for 8.5 per cent of Essity’s total sales, means that the divestment of the shares does not qualify as ‘cessation of business’.