Festi hf.: Agreement on the main terms for Festi's acquisition of the entire share capital of Lyfja hf.

Festi hf.

Today, Festi hf. and SID ehf. signed an agreement that covers the main terms for the proposed acquisition by Festi hf. of the entire issued share capital of Lyfja hf.

Festi specializes in the operation of retail companies and operates Krónan, N1 and ELKO as well as owning and operating a total of 87 real estate properties totalling around 95,000 square meters across Iceland. The company also operates two warehouses under the name Bakkinn vöruhótel, which specializes in warehouse services and distribution. Festi's total turnover was ISK 131 billion in 2022.

Following the signing, the parties to the agreement will begin negotiations on the acquisition with the aim of reaching an agreement on the substance of the final purchase agreement.  The negotiations will be based on the assumptions and terms of the agreement signed today, taking into account the results of the buyer's due diligence.

The agreement assumes that Lyfja has a total value of ISK 7.8 billion, but the final purchase price of the share capital will depend on the company's debt position at the time of delivery, as well as the price of Festi shares at that time.  Lyfja estimates that its 2023 earnings before interest, taxes, depreciation and amortization (EBITDA), excluding IFRS16 effects, will amount to ISK 1,044 million.  The agreement assumes that the purchase price will be paid by the delivery of 10 million shares in Festi, worth about 1.8 billion based on the current closing price of Festi's shares on Nasdag Iceland, and ISK 6.0 billion in cash.

The deal is subject, among other things, to the following conditions: (i) that an agreement is reached on the final purchase agreement (ii) due diligence is carried out (iii) financing of the transaction (iv) that the buyer's shareholders' meeting approves the use of share capital for the transaction (v) the approval of the Icelandic Competition Authority.  If agreed, the transaction is expected to close in the 1st quarter of 2024.

Further details about the transaction will be provided when a final purchase agreement has been agreed.

Better customer service and preventive healthcare
"The acquisition is part of Festi's future vision of offering a wide range of essential products at affordable prices throughout Iceland. By selling pharmaceuticals and medical products, we can better serve our customers as well as contribute to improved public health in Iceland. Lyfja is a sound company that has placed great emphasis on education and preventive health protection. This emphasis is in line with future vision of the companies within Festi. With Lyfja's well-established and strong brand and the experienced professionals who work there, it will be possible to build another strong pillar within the Festi group," says Ásta S. Fjeldsted, CEO of Festi, who officially returned today after being on maternity leave.