Norwegian Orkla Group buys Åland snack food manufacturer Chips

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The Norwegian Orkla Group has offered to buy the snack food manufacturer Chips in the semi-autonomous Åland Islands for EUR 402 million. Chips is the most valuable foodstuffs manufacturer quoted on the Helsinki Stock Exchange.
      On Monday Orkla said that it was offering EUR 22.85 in cash for the remaining shares of Chips. This represented a premium of about 31% over the company’s average share price on the Helsinki Stock Exchange in the past year.
      Rumours of a buy-out offer by Orkla started circulating soon after trading in Chips shares was suspended on Friday.
      Orkla already has a 20.4% holding in Chips, and 14.2% of the company’s voting rights.
     
The board of directors of Chips recommends that the shareholders accept Orkla’s offer.
      Chips is the largest single company in the Åland Islands outside the shipping business, and there has been some concern in Åland over whether or not the Chips factory and offices will remain in the province, as well as the future of the farmers who grow potatoes for the company.
      Orkla CEO Finn Jebsen said on Monday that Chips would remain in Åland.
      In addition to Åland, Chips has operations, manufacture, storage and marketing in 12 locations in the Nordic Countries, the Baltic States, and Russia.
      Established in 1969, Chips employs 1,300 people, about 200 of whom work in Åland. Last year its turnover was EUR 298 million.
     
Experts say that the main reason for Orkla’s interest in Chips is its hope to get into the Russian market. Last year Chips bought a Russian potato crisp manufacturer, whose sales have since grown quickly.
      Teaching the Russians to eat high-sodium, high-carb, high-fat snack foods takes some work, but the Nordic entrepreneurs are confident that the marketing effort will be successful.
      "When we started, the Finns ate about 100 grams of crisps and snacks per capita. Now they eat two and a half kilos. Even that is not much: in Sweden consumption is nearly four kilos, in Norway it is six, in Britain seven, and in the United States 11 kilos [a year]", says Sture Carlsson, head of the Chips Group.


Links:
  Chips Group web site: Public tender offer for Chips (8.11.2004)
  Orkla Group web site: Orkla makes offer for the remaining shares in Chips Abp (8.11.2004)

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