5/31/2000 11:00 

The Supervisory Board for Carlsberg A/S has decided: 

  • Carlsberg A/S' and Orkla ASA's brewing activities will be pooled in a new Danish company called Carlsberg Breweries A/S
     
  • Carlsberg A/S will own 60 per cent and Orkla ASA 40 per cent of Carlsberg Breweries A/S
     
  • Carlsberg will be the leading international brand
     
  • Carlsberg Breweries A/S' total beer volume will amount to approx. 54m hl
     
  • Carlsberg Breweries A/S will have approx. 27,000 employees, a turnover of about DKK 23bn and an operating profit of about DKK 2bn
     
  • Synergy effects are estimated to result in savings of about DKK 300m a year within three to four years
     
  • Carlsberg Breweries A/S will be a significant international brewing operation with the Nordic countries as its domestic market and with great potential for growth in Russia and the Baltic states
     
  • In addition, Carlsberg Breweries A/S will primarily concentrate efforts on its comprehensive activities in Europe and Asia.

Orkla ASA is one of Norway's largest listed companies

For further information
Flemming Lindeløv
President and CEO, Carlsberg A/S
Tel: + 45 33 27 33 27

Meetings
Press meetingon 31 May at 11:00 at Carlsberg A/S, Ny Carlsberg Vej 100

Analysts meetingon 31 May at 13:00 at Carlsberg A/S, Ny Carlsberg Vej 100


Carlsberg Breweries A/S established

Carlsberg A/S and Orkla ASA have reached an agreement under which Carlsberg A/S establishes a Danish-registered company, Carlsberg Breweries A/S with headquarters in Copenhagen.

Carlsberg Breweries A/S will include all the domestic and overseas beer activities of Carlsberg A/S together with Saltum and Neptun Bryggerier. Orkla will contribute all its beer and soft drink activities as payment in kind to Carlsberg Breweries A/S in exchange for shares in the new company.

Orkla's beer and soft drink activities include Pripps Ringnes AB, AB Pripps Bryggerier, Ringnes A.S. and 50 per cent of Baltic Beverages Holding AB (BBH). Carlsberg A/S will own 60 per cent and Orkla ASA 40 per cent of Carlsberg Breweries A/S, which will control and operate all activities.

The transaction is based on a valuation of the two companies based on expectations of future earnings and cash flow.

Carlsberg Breweries A/S will have a net turnover of about DKK 23bn, an operating profit of approx. DKK 2bn. Synergy effects are estimated to amount to savings of about DKK 300m a year in three to four years.

Carlsberg A/S will have a 60 per cent ownership of Carlsberg Breweries A/S, responsibility for the Carlsberg Laboratory and Carlsberg Research Center, as well as shareholdings in companies not related to Carlsberg's beer business, such as A/S Kjøbenhavns Sommer-Tivoli, Royal Scandinavia A/S, property companies (Tuborg Nord/Syd) and Coca-Cola Nordic Beverages A/S. Furthermore, Carlsberg A/S will retain the rights to the Carlsberg brand. Carlsberg Breweries A/S will have the right of use for a period of 99 years with an option to renew. The rights to Tuborg and other trade marks will be transferred to Carlsberg Breweries A/S.

Additional facts

The agreement is subject to approval by the authorities, to the approval by Orkla's corporate assembly and a due diligence procedure satisfactory to both parties. The latter is expected to be completed by August 2000. Once these preconditions have been met, the agreement will take effect as of 1 July 2000.

Coca-Cola Nordic Beverages A/S will not be part of Carlsberg Breweries A/S. Carlsberg A/S is negotiating with The Coca-Cola Company Inc. (TCCC) about the future of the jointly owned company and it is expected TCCC will wish to re-evaluate the agreements concerning the company, because of Orkla's agreements with PepsiCo.

Carlsberg A/S will not take advantage of its option to buy 25 per cent of the share capital in the Norwegian brewery Hansa Borg ASA, following the creation of Carlsberg Breweries A/S.

Both Carlsberg A/S and Orkla ASA are ensured right of first refusal should either party wish to sell its shares in Carlsberg Breweries A/S. The agreement also contains the possibility of a stock exchange listing of Carlsberg Breweries A/S, although at the earliest after the end of the third financial year.

Carlsberg A/S and Orkla ASA have also agreed that a substantial part of Carlsberg Breweries A/S' profit for the year will be paid out as dividend to the two shareholders.


Strengthened position

The formation of Carlsberg Breweries A/S and the take-over of Orkla's brewing interests is perfectly in keeping with Carlsberg's strategy of strengthening its position in the international market. Carlsberg Breweries A/S will be even better equipped to take part in the international consolidation in the brewing industry. The company will have a strong position in all Nordic markets, as well as an equally strong position in the large growth markets of Russia and the Baltic states.

Carlsberg Breweries A/S' aim will be to create further growth, partly through its own companies and partly through acquisitions. Carlsberg will be the leading international brand, together with strong regional brands like Tuborg and Baltika, and local brands such as Tetley's, Pripps, Ringnes, Koff and Karhu. Furthermore, the company will emphasise consideration for quality, employees, the environment and society.

In future, the main geographical areas will be the Nordic countries, eastern and western Europe, and Asia.


The Supervisory Board of Carlsberg Breweries A/S

The Supervisory Board will have eight representatives chosen by the shareholders. Five representatives will be from Carlsberg and three from Orkla. There will be four employee board members. The chairman and deputy chairman will be appointed by Carlsberg and Orkla, respectively. The right to appoint the chairman and deputy chairman will change every three years, which means that after the AGM in 2004, Orkla will be entitled to appoint the new chairman for a three-year period.

The Supervisory Board will primarily consist of members with a background in business.


The Executive Board of Carlsberg Breweries A/S

The Executive Board of Carlsberg Breweries A/S will consist of President and Chief Executive Officer Flemming Lindeløv, Group Managing Director Nils Smedegaard Andersen, Group Managing Director Michael C. Iuul, Group Managing Director Paul Bergqvist and Group Managing Director Bjørn Erik Næss.

Until the combination of Orkla's and Carlsberg's activities has been finalised, no changes will be made to the present Executive Board of Carlsberg A/S. Once this has been completed, President and CEO Flemming Lindeløv, Group Managing Director Nils Smedegaard Andersen and Group Managing Director Michael C. Iuul will leave the board of Carlsberg A/S to take up their places on the board of Carlsberg Breweries A/S.


Orkla's beverage activities

Orkla's beverage activities include AB Pripps Bryggerier in Sweden (100% owned), Ringnes A.S. in Norway (100% owned) as well as BBH, Baltic Beverages Holding (50% owned) and Rent a Cooler (100% owned).

Orkla's 20.38 per cent shareholding in the Finnish brewery Hartwall will not be included in Carlsberg Breweries.


Pripps Ringnes

Pripps is market leader in Sweden with a 33 per cent share of the beer market and a 19 per cent share of the market for soft drinks and mineral water, among other things because of the famous brand Ramlösa. Pripps has two breweries and an efficient distribution system with national coverage.

Ringnes operates in the markets for beer, soft drinks and mineral water. Ringnes runs five breweries in Norway, and is market leader with a 59 per cent share of the beer market and 31 per cent of the market for soft drinks and mineral water. Ringnes has its own nation-wide distribution system and sales force.

AB Pripps Bryggerier and Ringnes A.S.have started a restructuring process in order to improve the companies' efficiency and increase turnover.


Baltic Beverages Holding (BBH)

BBH was founded in 1991 as a 50/50 joint venture between Pripps Ringnes and the Finnish brewery Hartwall for the purpose of expanding in Russia, the three Baltic states and in the Ukraine.

Today, BBH owns six Russian breweries, a stake in a malting operation and is market leader with a 25 per cent of the Russian market, which continues to be highly fragmented. In the Baltic states, BBH owns four breweries, a shareholding in a malting operation in Lithuania and is market leader in all three markets. BBH's primary business area is beer, but the portfolio also includes soft drinks and mineral water. BBH owns two breweries in the Ukraine, a stake in a malting operation and has 15 per cent of the beer market.


The Carlsberg Group

Carlsberg was founded more than 150 years ago in Copenhagen. Today, the company is one of the larger international breweries with activities world-wide. It has around100 subsidiaries and associated companies, which brew and sell the famous beer brands Carlsberg and Tuborg. Approximately 90 per cent of beer sales take place outside Denmark. Danbrew Ltd. A/S and Danish Malting Group A/S also form an important part of the company's beer activities.

Apart from its 100 per cent owned beer and soft drink activities, the Carlsberg Group has a 51% stake in Coca-Cola Nordic Beverages A/S, which produces and markets well-known brands such as Coca-Cola, Fanta and Sprite in the Nordic region.

The Group also has interests in other business areas, for example in Royal Scandinavia A/S (64.9% owned), the biggest industrial arts company in the Nordic region, as well as A/S Kjøbenhavns Sommer-Tivoli (43% owned). However, it has been decided to sell these shareholdings.

Carlsberg has deep-rooted traditions of producing high-quality products and has had its own laboratory from the very beginning. Carlsberg Laboratory still carries out research to ensure the best possible scientific basis for malting, brewing and fermentation procedures. Today, the laboratory is an independent unit within the Carlsberg Research Center, which enjoys international acclaim for its research results.

The ownership structure is also unique. Carlsberg A/S is listed on the Copenhagen Stock Exchange, but the largest, single shareholder by far is the Carlsberg Foundation, which is required by its statutes to hold a minimum of 51 per cent of the share capital in the company.

The goals of the Carlsberg Foundation are: a) to make subsidies available to and head the management of the Carlsberg Laboratory according to its statutes, b) to act for the promotion and support of the natural sciences, as well as mathematics, philosophy, the humanities and social sciences, c) to maintain and develop the Museum of National History at Frederiksborg and d) to provide support for the Tuborg Foundation, which supports activities of benefit to society, especially to Danish business.

As previously announced, the half-year report will be released on June 7, 2000.


Appendix

Highlights and key figures for Orkla's beverage activities - Pripps Ringnes AB, BBH (50%)

DKK million
1998
1999
1/1 - 30/4
2000
Net turnover
6,383
6,089
1,838
Operating profit before goodwill
649
630
83
Number of employees
10,169
11,681
12,776
Volume million hl
18
20
7.2


Highlights and key figures for Carlsberg's beer and soft drinks activities

DKK million
1997/98
1998/99
1/10-31/12
1999
Net turnover
16,832
16,625
4,418
Operating profit (EBIT)
1,254
1,151
364
Number of employees
14,789
14,864
Volume (beer) million hl
35
37
10


Highlights and key figures for the Carlsberg Group 1998/1999

Net turnoverDKK 31.3bn
Operating profit (EBIT)DKK 1.7bn
    
Number of employees, approx.21,906


In the financial year 1998/99, the Carlsberg Group sold 37m hectolitres of beer and 14m hectolitres of soft drinks.