Altia and Arcus merge to become global player

Nordic drinks groups Altia and Arcus have agreed to merge into a new wine and spirits company, called Anora Group.

The agreement between Altia, producer of Koskenkorva vodka, and Linie aquavit owner Arcus, will see the creation of a new company, called Anora Group. As a result, Norway-based Arcus will be dissolved and merged with Altia. The new company will be based in Helsinki, Finland, where Altia is headquartered.

Sanna Suvanto-Harsaae, chairman of Altia’s board, said: “This combination of two equal Nordic companies is a logical continuation on Altia’s strategic journey that started with the initial public offering in 2018. Together, these two innovative companies are taking an important step to become the Nordic wine and spirits brand house with excellent potential for growth also outside the Nordics.”

Together, the two firms’ preliminary annual revenue was €640 million (US$748.5m) in 2019. The two companies employ around 1,000 workers across the Nordic and Baltic countries.

The creation of Anora will enable the firms to have a “strong foothold in the Nordic markets making it an attractive partner with its superior pan-Nordic route to market”.

Anora is also “well positioned for stronger international expansion” due to the combined cash flow of the two companies. The new firm will also become a “competitive northern European player able to seek further growth also through targeted M&A [mergers and acquisitions]”.

Michael Holm Johansen, chairman of Arcus’ board, said: “Arcus and Altia have a strong Nordic position based on long heritage, iconic brands and unique understanding of the Nordic consumer.

“This merger will create significant value for shareholders in both companies, and the combined company will financially be in an even stronger position to pursue growth beyond its core Nordic business. It will be an attractive company for customers, partners and be able to employ the best talent.”

In addition, the merger provides a “step-change in scale with expected efficiencies throughout the value chain” and will allow the firm to improve its cost position.

Anora is aiming for earnings before interest, taxes, depreciation and amortisation (EBITDA) net synergies of around €8m-€10m (US$9.3m-US$11.7m) yearly. This would be achieved through cost synergies in sourcing, manufacturing, logistics and selling, general and administrative expenses (SG&A), as well as combined revenue from home markets and beyond. These synergies are projected to be attained within two years from the completion of the merger.

‘Significant growth potential’

Furthermore, Pekka Tennilä, CEO of Altia, will become CEO of Anora, while Arcus chief financial officer (CFO) Sigmund Toth will step into the CFO role.

Tennilä added: “Through added scale and more efficient production, we can further strengthen our leading sustainability position. Joining forces will provide significant growth potential in exports and create better possibilities to bring our iconic brands and sustainable Nordic drinks experiences to new markets.

“I also believe the combination will improve our image as an attractive employer in the Nordics and offer even better development opportunities for our professionals in a Nordic inclusive working culture.”

Completion of the merger is subject to approval through a vote at Altia and Arcus’ extraordinary general meetings, which are due to be held in November 2020. The merger is expected to be finalised during the first half of 2021.

Last month, Altia saw sales decrease by 9.5% during the first half of 2020 due to the impact of Covid-19 on travel retail, exports and on-trade sales. The firm had also made a number of temporary staff layoffs as a result of the coronavirus crisis.