Bergs Timber AB (publ) (OM:BRG B) signed a letter of intent to acquire SIA Vika Wood, BYKO-LAT SIA, Aktsiaselts Laesti, Aktsiaselts EWP and Continental Wood Products Ltd (targets) from Norvik Timber Industries Ltd for approximately SEK 890 million on January 22, 2018. As of April 17, 2018, Bergs Timber AB (publ) (OM:BRG B) signed an agreement to acquire SIA Vika Wood, BYKO-LAT SIA, Aktsiaselts Laesti, Aktsiaselts EWP and Continental Wood Products Ltd (targets) from Norvik Timber Industries Ltd for approximately SEK 890 million. Consideration includes 170 million newly issued shares in Bergs Timber as well as a cash payment of SEK 270 million. The cash payment is intended to be paid with SEK 100 million in connection with the completion of the transaction, SEK 100 million on June 30, 2019 and SEK 70 million on June 30, 2020. On the amounts paid after the completion of the transaction, it is intended that Bergs Timber shall pay an interest of STIBOR 12-month plus 2%. Furthermore, it is intended that Norvik shall be entitled to a performance-based earn-out, which may amount to a maximum of SEK 40 million to be paid for the periods 2018, 2018 and 2020. Taking into account target’s net debt as at the end of August 2017, the total consideration amounts to SEK 891.6 million on a debt-free basis. The issue of shares in Bergs Timber will lead to an increase in shareholding of Norvík hf. from 29.52% to 64.68%. Norvik has announced its intention to sell parts of its shareholding with the long term intention to reduce its holding to levels below 50%. The Swedish Securities Council has also granted Norvik an exemption from the mandatory bid obligation. Bergs Timber has held discussions with a number of banks in connection with the acquisition financing and it is Bergs Timber’s assessment that a long-term financing may be obtained for the funds required to pay the cash part of the purchase price. For the financial year ended August 2017, targets reported net sales of approximately SEK 1,613 million, operating profit of SEK 102 million, EBITDA of SEK 82 million and a profit after tax amounting to SEK 78 million. Bergs Timber’s Board of Directors, which currently includes two members that are involved in Norvík hf., is expected to stay the same as Norvik does not intend to pursue that more members are elected to the board of directors in Bergs Timber. The acquisition is subject to the conclusion of a final acquisition agreement and that the issue of consideration shares is resolved on by the general meeting in Bergs Timber. To this end an extraordinary general meeting will be held on May 14, 2018. For the continued process it is required that any necessary approvals of relevant regulatory or competition authorities are obtained, relevant banks approval in respect of acquisition and financing as well as Norvik entering into a lock-up agreement entailing that Norvik may not sell its shares in Bergs Timber during a period of two years from the completion of the acquisition agreement. Bergs Timber has initiated a due diligence process review of the targets, which is planned to be completed in the beginning of March 2018. A conditional purchase agreement is thereafter intended to be entered into. As of May 14, 2018, the shareholders of Bergs Timber approved the acquisition in their Extraordinary General Meeting. As of May 15, 2018, all conditions with respect to the acquisition have been met. Additionally, final approval has been obtained from relevant banks with respect to the acquisition and its financing. The transaction is expected to be completed during the second quarter 2018. Bergs Timber assesses that the acquisition will lead to an increase in its earnings per share. Kadri Kallas, Andra Rubene, Nauris Grigals, Meree Punab and Kärt Raud of TGS Baltic acted as legal advisor to Bergs Timber. Ernst & Young acted as a due diligence provider to Bergs Timber AB.