Hagar hf. acquire all shares in Olíuverzlun Íslands hf. and DGV ehf.

28. April 2017

Hagar hf. have signed an agreement to buy all shares in Olíuverzlun Íslands hf. (Olís) and the real estate company DGV ehf. Hagar‘s lead advisor in the transaction was Arctica Finance.

Olís specializes in sales and services related to fuel and other oil products, as well as various essentials for individuals and companies. The company‘s distribution network is substantial and it has approx. 115 operations in about 50 places around the country, mainly under the brands of Olís, ÓB and Rekstrarland. Olís owns 40% in the fuel services company Olíudreifing ehf. DGV ehf. is a real estate company which owns approx. 3,000 m of property as well as rights to land which is not related to Olís‘ operations. The total turnover of Olís in the year 2016 was about ISK 31 billion.

The total enterprise value of Olís is valued at ISK 15,100 m and its interest bearing debt is ISK 5,928 m. Therefore, the total purchase price of the shares in Olís is ISK 9,172 m. The final purchase price can change, based on Olís results for the year 2017. If Olís EBITDA for the fiscal year 2017 is higher than ISK 2,100 m the acquisition price will increase. However, the acquisition price will never increase by more than ISK 1,000 m if Olís EBITDA for the fiscal year 2017 reaches ISK 2,300 or more. The EBTIDA for the fiscal year 2016 was ISK 1,908 m. The purchase price will be paid by delivering 111 m shares in Hagar and by cash payment, which will in part be financed by raising new debt. When calculating the purchase price, the price per share in Hagar is fixed at ISK 47.5. The sellers have obligated themselves not to sell or transfer the shares they acquire in Hagar for 12 months after completion. The total enterprise value of DGV is ISK 1,040 m, with interest bearing debt of ISK 640 m. The total purchase price of DGV is ISK 400 m and the total purchase price of the whole transaction is therefore ISK 9,572 m.

The share purchase agreement is conditional to due diligence findings, the shareholders of Hagar agreeing to increase the share capital of Hagar and the approval of the Icelandic Competition Authority. Should those condition be concluded in a favourable manner, the completion of the transaction should take place by the end of this year.

Along with this transaction, and the before announced acquisition of Lyfja hf. by Hagar, the board of directors of Hagar has decided to depart from the previously agreed dividends policy and propose to the general meeting next June that no dividends will be paid in the year 2017.