Orkla is interested in using its 14% equity holding in Rieber & Son as a platform to acquire a majority position in the food group.
“Orkla is now cash rich and in a position to fund a large-sized foods company. Rieber & Son would be an ideal candidate. It has strong food brands like Toro that Orkla would love to have in its portfolio,” said Fondsfinans analyst Per Haagensen.
A second investment markets analyst with Oslo-based Pareto said Orkla could “make a move” on Rieber during the first half of 2007.
“It’s only a question of time before Orkla starts to seriously share-build in Rieber & Son. Orkla may say it is not in any hurry but what is clear is that Orkla’s corporate style is based on doing what their competitors least expect. I wouldn’t rule out a bid during 2007,” the insider said.
The potential synergy gains from a takeover are the chief driving force behind Orkla’s interest in Rieber, said Haagensen. “Orkla’s core product fare includes pizzas and ready-to-serve meals. Rieber & Son is specialised in soups, frozen foods and preserves. Rieber & Son is also strong in Poland and the Czech Republic. These are markets where Orkla Food wants to grow,” said Haagensen.
Unilever, which owns Knorr, was rumoured to be in talks with Rieber last June, said the Pareto analyst. “The talks were brief and did not lead anywhere,” said the analyst.
“If Orkla does initiate a bid it will probably be routed through its investment company Atlantis Vest. Rieber & Son’s shares are currently trading at EUR6.88 (US$9.11). I doubt if Rieber & Son shareowners would be too inclined to sell unless a significant premium was offered by Orkla. A price of EUR10 per share might work,” said the Pareto analyst.
Rieber & Son reported revenues of EUR443.4m in 2005. The Orkla Group had revenues in the same year of EUR 5.5bn.
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