Essity completes sale of its shares in Vinda
The company will maintain its presence in Asia and Vinda through continued licensing of its brands
Essity, a hygiene and healthcare company, yesterday completed the sale of its entire 51.59% stake in the shares of Asian hygiene company Vinda International Holdings Limited (Vinda) for HK$23.50 per share. Proceeds from the sale amounted to HK$14.6 billion (approximately SEK 19 billion). Essity will continue to have a presence in Asia and Vinda through the continued licensing of its brands.
On December 15, 2023, Essity announced that Isola Castle Ltd, a company indirectly owned by Asia Pacific Resources International Limited (APRIL), intended to make a conditional public offer to Vinda shareholders to acquire 100% of the company’s issued shares for HK$23.50 per share.
Essity signed an irrevocable commitment to accept the offer in respect of its entire 51.59% interest. The offer was announced on March 8, 2024 and, in line with its commitment, Essity accepted the offer. The public offer price will correspond to a book value for all shares of approximately HK$28.3 billion (SEK37 billion).
“Essity is now in better shape than ever. After the Vinda sale, higher-margin, less capital-intensive categories account for a larger share 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 the share of consumer tissue in net sales in 2023 from 41% to 33%. We expect to continue to develop a portfolio of more value-generating categories,” says Magnus Groth, president and CEO of Essity.
Since 2014, Essity’s 51.59% interest in Vinda was consolidated at 100%, in addition, beginning in the fourth quarter of 2023, the company classified Vinda’s financial reporting as discontinued operations.
Vinda is listed on the Hong Kong Stock Exchange and had a market capitalization of approximately HK$25 billion (SEK33 billion) at the close of trading on December 14, 2023. In addition, 83% of Vinda’s net sales were related to tissue and 17% to personal care products.
Essity has several legal opinions confirming that the sale of Vinda shares does not constitute a “cessation of operations” under the company’s EMTN program. According to the company, these opinions considered various qualitative and quantitative factors, such as the continuation of business with Vinda under license, etc. However, the fact that Essity owns only 51.59% of the shares and sales account for 8.5% of Essity’s total sales means that the sale of the shares does not qualify as “cessation of business.”
