ICA Gruppen to acquire Apotek Hjärtat AB

ICA Gruppen has signed an agreement with Altor Fund III to acquire Apotek
Hjärtat, Sweden’s largest private pharmacy retailer, for a consideration of SEK
5.7 billion on a cash and debt free basis. The acquisition positions ICA Gruppen
as the second largest player in the Swedish pharmacy retail market. The
transaction provides significant opportunities in an interesting and important
sector and creates synergies with other parts of ICA. The effect of the
acquisition on ICA Gruppen’s earnings per share is expected to be accretive
during 2015, adjusted for acquisition related one-offs.
“We have since the establishment of Cura apoteket in 2010 successfully been
operating high quality pharmacies that are appreciated by customers. With the
acquisition of Apotek Hjärtat, a well-managed company with a strong brand, we
increase the scale of this business and see significant opportunities and
synergies. We can now provide customers with an even better and more
comprehensive product offering within health, medicine and wellbeing, with high
standards on safe and effective medication. The transaction benefits ICA’s and
Apotek Hjärtat’s customers as well as ICA Gruppen’s shareholders”, says Per
Strömberg, CEO of ICA Gruppen.

Apotek Hjärtat and Cura apoteket have combined sales amounting to approximately
SEK 11bn, of which about SEK 3bn within personal care. Together, Apotek Hjärtat
and Cura apoteket will have the number two position on the Swedish market with a
market share of around 30 percent.

The acquisition is expected to generate annual cost synergies to ICA Gruppen of
around SEK 80m from 2019. The synergies are mainly related to overhead,
purchasing and logistics. For additional information, see Financial effects of
the acquisition.

Also, ICA Gruppen envisages opportunities for additional value creation through
an expanded and improved customer offering, stronger product development,
marketing and e-commerce.

The acquisition will initially be financed using a combination of available cash
and existing credit facilities. Completion is subject to the Swedish Competition
Authority and Drug Administration approval, expected to be received in April
2015 at the latest.

Post completion of the transaction, Apotek Hjärtat and Cura apoteket will be
combined into a separate subsidiary of ICA Gruppen and reported as a separate
segment. Anders Nyberg, current CEO of Apotek Hjärtat, is contemplated as CEO of
the new entity.

ABG Sundal Collier has acted as financial advisor and Gernandt & Danielsson has
acted as legal advisor to ICA Gruppen in connection to the transaction.

For more information
ICA Gruppens press service, telephone: +46 (0) 10 422 52 52
Investor Relations, Frans Benson, telephone: +46 (8) 561 500 20

About Apotek Hjärtat
Apotek Hjärtat is Sweden’s largest private pharmacy chain and was founded in
connection with the deregulation in 2009, when 208 community pharmacies where
acquired. The business has approximately 2,700 employees and operates 306
pharmacies. Apotek Hjärtat’s operations consist of pharmacy retail in the form
of physical pharmacies, e-commerce, inpatient operations and animal pharmacy
operations. Apotek Hjärtat’s net sales for 2013 were SEK 8,266 m and for the
period January-September 2014 SEK 7,050m. EBITA for 2013 were SEK 345m and for
the period January-September 2014 SEK 339m.

About Cura apoteket
Cura apoteket was founded in 2010 by ICA Gruppen and is ICA’s own pharmacy
chain, which is located in large ICA stores across the country. Cura apoteket
has grown organically and currently has around 700 employees and 65 pharmacies
with a turnover of SEK 2,000m in 2014. The business consists of pharmacy retail.
Cura apoteket promotes health and wellbeing through accessibility, transparency
and competence, which adds value to the ICA customer. The operation continues to
expand substantially through new establishments. Cura apoteket’s net sales for
the full year 2013 was SEK 1,671m and for the period between January-September
2014 SEK 1,525m. EBITA for 2013 amounted to SEK -32m and for the period January
-September 2014 SEK 12m.

Financial effects of the acquisition
Combined yearly impact on ICA Gruppen of SEK 80m by 2019 and consists of cost
synergies net of the royalty as stated below.

Total annual cost synergies are expected to approximately SEK 100m by 2016 and
to SEK 150m post full implementation by 2019. Also, ICA Gruppen envisages
opportunities for additional value creation through an expanded and improved
customer offering, stronger product development, marketing and e-commerce.

Realisation of synergies is enabled through access to ICA Sweden’s
infrastructure which is funded by ICA-retailers in line with ICA Gruppen‘s
business model. Access is provided for Apotek Hjärtat to, e.g., infrastructure
for marketing, IT, CRM, logistics and procurement. Therefore, Apotek Hjärtat
will, as of 2016, contribute to cost cover funding through a sales-based
royalty. The royalty is expected at SEK 60m in 2016 and SEK 70m per year from
2019.

The effect of Apotek Hjärtat on ICA Gruppen’s earnings per share is expected to
be accretive during 2015, adjusted for acquisition related one-offs. The
transaction alone does not affect ICA Gruppen’s dividend policy. ICA Gruppen’s
financial position is expected to remain strong after the transaction is
completed.

ICA Gruppen discloses the information provided herein pursuant to the Securities
Market Act and/or the Financial Instruments Trading Act. The information was
submitted for publication at time 06.55 CET on Wednesday the 12th of November
2014.
ICA Gruppen AB (publ) is one of the Nordic region’s leading retail companies,
with around 2,300 of its own and retailer-owned stores in Sweden, Norway,
Estonia, Latvia and Lithuania. The Group includes the retail companies ICA
Sweden, ICA Norway and Rimi Baltic, ICA Real Estate, which owns and manages
properties and ICA Bank, which offers financial services to Swedish customers.
The Group also includes the wholly owned portfolio company inkClub and partly
owned portfolio companies Cervera and Hemtex. For more information see
icagruppen.se (http://www.icagruppen.se)