Shares in Swiss beauty company Oriflame Holding AG jumped as much as 34.5% in mid-morning trading after its founding family, the af Jochnicks, offered to take the company private.
The founding family, which controls 30.81% of the shares in Oriflame, made an offer to purchase all shares of the company it does not already own at a per share price of 227 Swedish kronor, valuing the company at 12.85 billion kronor.
The offer was made through Walnut Bidco PLC, a wholly owned company set up by members of the families of co-founders Robert af Jochnick and the late Jonas af Jochnick, who died May 17.
The family said the offer was at a premium of 34.8% compared to the closing price May 21 of 168.35 kronor and 31.9% higher than the volume weighted average trading price over the 10 calendar days ended May 21.
The family plans to fund the proposed acquisition by a combination of funds available to Walnut Bidco by way of equity commitment letters from its owners and debt financing pursuant to an agreement arranged by Goldman Sachs Bank USA. The offer is subject to customary closing conditions.
The cosmetics company is facing tough market conditions including a slowdown in the Asia and Turkey region. The company is also strategically repositioning itself to adapt to the rapidly evolving end markets and distribution models.
The family said that to address the current challenges the company faces, it believes that Oriflame should be "operated in a private setting."
"It has become increasingly obvious to the family that the company is facing a number of headwinds," said, Alexander af Jochnick, representative of Walnut Bidco and chairman of Oriflame. "The family believes that the company needs to undertake a repositioning in key geographies, and that achieving this repositioning has challenges in the public market," he added.
"The company needs to continue to roll-out and implement its strategic repositioning, which will take a significant amount of time and effort, and whose benefits will materialize in the long-term at the potential expense of short term results," the family said in a statement.
"To that end, the af Jochnick family believes that Oriflame should be operated in a private setting, and be owned by shareholders that have already been affiliated with the Company for many years."
The af Jochnick family said it has not yet decided to alter Oriflame's business model, its management or employees.
In a separate statement, Oriflame said that the independent members of the board formed an independent bid committee, excluding the af Jochnick family board members, to evaluate the offer.
The committee is expected to respond to the offer before June 10.
Carnegie Investment Bank and Morgan Stanley & Co. International PLC will serve as the financial advisers and Vinge and Walder Wyss as legal advisers to the committee in relation to the offer.
As of May 21, US$1 was equivalent to 9.66 Swedish kronor.