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3.2 Business acquisitions and disposals of assets
Acquisitions in 2017
In 2017, Kesko Group did not have acquisitions to be accounted for as business combinations.
Acquisitions in 2016
In April 2016, Kesko Food Ltd, a Kesko Corporation subsidiary, acquired the whole share capital of Suomen Lähikauppa Oy from the private equity investment firm Triton. In June 2016, Kesko Corporation acquired Onninen Oy's whole share capital from Onvest Oy. In December 2016, VV-Auto Group Oy acquired the whole share capital of Oy Autocarrera Ab and as a result, the import and retailing of Porsche transferred to VV-Auto.
2016
€ million
Suomen Lähikauppa Onninen Group Oy Auto-
carrera Ab
Consideration paid 54 364 27
Provisionally determined fair values of assets acquired and liabilities assumed as at the date of acquisition
Intangible assets 5 94 2
Property, plant, equipment and investments 33 21 1
Inventories 33 227 9
Receivables 12 238 4
Deferred tax asset 22 3 -
Cash and cash equivalents 8 17 0
Total assets 113 599 16
Trade payables, other payables, provisions 134 275 7
Deferred tax liability 0 16 1
Total liabilities 134 291 8
Net assets acquired, total -22 309 8
Goodwill 76 55 19
Cash flow impact of acquisition
Consideration paid -54 -364 -25
Cash and cash equivalents acquired 8 17 0
Cash flow impact of acquisition -46 -347 -25
Suomen Lähikauppa Oy
On 12 April 2016, Kesko Food Ltd, a Kesko Corporation subsidiary, acquired the whole share capital of Suomen Lähikauppa Oy from the private equity investment firm Triton. The debt-free price of the acquisition, structured as a share purchase, was €54 million. Suomen Lähikauppa has concentrated on grocery stores located near customers. The acquisition underpins Kesko's new strategy, one focus area of which is to increase and renew the neighbourhood store network.
The tables above are a condensed presentation of the consideration paid to Triton, the values of the assets acquired and liabilities assumed by Kesko Group as at the date of the acquisition, as well as the cash flow impact of the acquisition. The €76 million goodwill from the acquisition reflects the synergies expected to arise especially from purchasing and logistics, marketing, store site network development, information system expenses and administration.
The Group's profit for January-December 2016 includes costs incurred from an acquisition in the amount of €1.2 million, the most significant of which is the €0.6 million asset transfer tax. The costs are presented within items affecting comparability.
Suomen Lähikauppa contributed €575 million to the net sales of the April-December period 2016. The impact on the comparable operating profit for the April-December period 2016 was €-7.4 million and taking synergies into account, €-3.2 million. Management estimates that if the acquisition had been completed on 1 January 2016, the impact on the Group's net sales would have been approximately €795 million. The impact on the comparable operating profit would have been €-17 million. When determining the amounts of net sales and comparable operating profit, management estimates that the fair values recognised at the date of acquisition would have been the same if the acquisition had been completed on 1 January 2016.
Onninen Oy
Kesko Corporation acquired Onninen Oy's whole share capital from Onvest Oy on 1 June 2016. The debt-free price of the acquisition, structured as a share purchase, was €364 million. Onninen is one of the leading providers of HEPAC and electrical products and services in the Baltic Sea Region and Scandinavia. The group specialises in B2B trade and has around 150 units in Finland, Sweden, Norway, Poland and the Baltic countries.
The tables above are a condensed presentation of the consideration paid to Onvest Oy, the values of the assets acquired and liabilities assumed by Kesko Group as at the date of the acquisition, as well as the cash flow impact of the acquisition.
The total value of the intangible assets acquired as at the date of the acquisition (including customer relationships and trademarks) is €94 million. The balance sheet value of current trade receivables equals their fair value. The €55 million goodwill from the acquisition reflects the synergies expected to mainly arise from the utilisation of the common customer relationships, from purchasing and logistics, the development of the store site network, as well as from ICT and administration.
The Group's profit for January-December 2016 include costs incurred from an acquisition in the amount of €6.8 million, the most significant of which is the €5.8 million asset transfer tax. The costs are presented within items affecting comparability.
Onninen contributed €908 million to the net sales of the June-December period 2016. The impact on the comparable operating profit for the June-December period 2016 was €18.2 million, adversely impacted by the fair value allocations of inventories written off in the amount of €5.1 million. Management estimates that if the acquisition had been completed on 1 January 2016, the impact on the Group's net sales would have been approximately €1,500 million. The impact on the comparable operating profit would have been €17.7 million. When determining the amounts of net sales and comparable operating profit, management estimates that the fair values recognised at the date of acquisition would have been the same if the acquisition had been completed on 1 January 2016.
Oy Autocarrera Ab
In December 2016 VV-Auto Group, a Kesko Corporation subsidiary, acquired the whole share capital of Oy Autocarrera Ab. As a result, the import and retailing of Porsche transferred to VV-Auto. The price of the acquisition, structured as a share purchase, was €27 million.
The tables above are a condensed presentation of the consideration paid, the values of the assets acquired and liabilities assumed by Kesko Group as at the date of the acquisition, as well as the cash flow impact of the acquisition. The €19 million goodwill derived from the acquisition reflects the synergies and growth potential expected to be realised as Porsche increases VV-Auto's car selection.
The Group's profit for December 2016 includes costs incurred from the acquisition in the amount of €0.6 million, the most significant of which is the €0.4 million asset transfer tax.
AutoCarrera contributed €4.4 million to the net sales of December 2016. The impact on the comparable operating profit for the December 2016 was €-0.0 million, adversely impacted by the fair value allocations of inventories written off in the amount of €0.1 million. Management estimates that if the acquisition had been completed on 1 January 2016, the impact on the Group's net sales would have been approximately €45 million. The impact on the comparable operating profit would have been €2.2 million. When determining the amounts of net sales and comparable operating profit, management estimates that the fair values recognized at the date of acquisition would have been the same if the acquisition had been completed on 1 January 2016.
Disposals of assets 2017
In May 2017, Kesko sold seven store sites used by Kesko Senukai in Estonia and Latvia to the property investment company UAB Baltic Retail Properties. At the same time, Kesko acquired a 10% shareholding in the property investment company.
In June 2017, Konekesko Ltd, a Kesko Corporation subsidiary, sold its Yamarin boat business to Inhan Tehtaat Oy Ab, a subsidiary owned by Yamaha Motor Europe N.V. At the same time, the transfer of the representation of Yamaha's recreational machinery in Finland from Konekesko Ltd to Yamaha Motor Europe N.V. was also completed.
In June 2017, Kesko Corporation sold Indoor Group, which is responsible for the Asko and Sotka furniture trade, to a company owned by Sievi Capital Oyj, three franchising entrepreneurs from the Sotka chain and Etera Mutual Pension Insurance Company. The debt free price of the sale, structured as a share transaction, was €67 million.
In June 2017, Kesko Corporation sold its K-maatalous business to Swedish Lantmännen ek för. The debt free price of the sale, structured as a share transaction, was €38.5 million.
Disposals of assets 2016
In July 2016, Kesko sold its shares in OOO Johaston and at the same time, disposed of the Intersport business in Russia.
In November 2016, Kesko sold the grocery business in Russia to Lenta Ltd. The aggregate consideration for the disposal was approximately €178 million, on which a €69 million comparable loss affecting comparability was recognised.
Net assets of subsidiaries sold
€ million 2017 2016
Property, plant, equipment and intangible assets 66.1 266.9
Inventories 61.3 7.3
Receivables 69.4 9.6
Cash and cash equivalents 1.2 6.1
Deferred taxes -7.8 -3.2
Liabilities -117.7 -180.4
Provisions -0.4 -
Net assets total 72.2 106.3
In addition, the real estate divestment in the Baltics completed on 24 May 2017 had a €14.0 million impact on the Group's net assets.