Kesko Oyj - Company Announcement

Kesko to acquire Onninen and strengthen its position in the building and technical trade

KESKO CORPORATION STOCK EXCHANGE RELEASE 12.01.2016 AT 09.00 1(5)

Kesko to acquire Onninen and strengthen its position in the building and
technical trade

Kesko Corporation has made an agreement to acquire Onninen Oy's whole share
capital from Onvest Oy. The pro forma net sales of the business to be acquired
were €1,438 million and the EBITDA was €39 million for the period from October
2014 until the end of September 2015. The transaction price of the debt-free
acquisition, structured as a share purchase, is €369 million. Onninen's steel
business and Russian subsidiary are not included in the acquisition.

The new entity will offer full building and technical trade selections for both
business and consumer customers. The acquisition will create an excellent
platform for the growth of Kesko's building and technical trade in Finland and
the rest of Europe.

Building and renovation are becoming increasingly technical and are increasingly
often assigned to professionals. Responding to this change taking place in the
market is one of the key objectives of Kesko's strategy. The acquisition of
Onninen will especially strengthen B2B sales. In the sales of the K-Group's
building and technical trade, the share of B2B sales is over 40 per cent and
with the acquisition, the share of B2B sales will rise to around 60 per cent.

With the acquisition Kesko's business in HEPAC and electrical product groups
will expand significantly and it will be able to provide better service
especially to contractor customers. In addition, Kesko will gain new customer
relationships from infrastructure and industry customer groups.

Both companies operate in the Baltic Sea Region and Scandinavian markets. After
completion, the arrangement will enable Kesko to gain significant economies of
scale and synergies.

"People have less time than before to carry out building projects that are
technically increasingly demanding and, more than before, they want to buy
ready-made building solutions. One of the key objectives of our strategy is to
respond to this development. With the acquisition of Onninen we will gain lots
of new, top notch expertise and expand into new product lines and new customer
groups. Onninen and its strong brand will give Kesko an excellent opportunity to
develop and expand sales to business customers. For Kesko, the acquisition of
Onninen is a perfect match, and the €3.6 billion net sales of Kesko's building
and technical trade will make it one of the leaders in the field in Europe and
the most international trading sector operator in Finland," says Kesko's
President and CEO Mikko Helander.

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, the Baltic
countries and Russia. The business to be acquired from Onninen employs around
3,000 people, around 1,200 of whom work in Finland. The company's steel business
and Russian subsidiary are excluded from the acquisition.

Maarit Toivanen-Koivisto, Chair of the Onvest Board, sees the acquisition as a
good solution for Onninen. "This is a significant transaction. The combination
of Onninen and Kesko will provide the Finnish industry sector with an excellent
distribution channel to the international markets. Together the companies will
form one of the largest building and technical trade companies in Europe, for
which Onninen's technical trade expertise provides a strategically significant
competitive advantage. The acquisition will create significant opportunities
when we will be able to share the best practices of both companies. At the same
time, it is important that Onninen remains in Finnish ownership."

Financial impacts of the acquisition

Kesko estimates that the acquisition will generate around €30 million in annual
synergies at the EBITDA level from 2020 onwards, assuming that the acquisition
is completed during the first half of 2016. The achievement of synergies will
require both capital expenditures and non-recurring costs. The combined net cash
flow impact of synergies is estimated at around €25 million positive in
2016-2019.

Economies of scale and synergies will mainly be sought from the use of common
customer relationships, from purchasing and logistics, from the development of
the store site network, as well as from ICT and administration.

The fair value allocations of the transaction price to net assets are estimated
to cause an expense item of around €5 million on the first six months.

The transaction will be paid in cash from Kesko's liquid assets and available
debt financing reserves.

Estimates of Kesko's future outlook in respect of the acquisition will be given
in connection with its completion.

The completion of the acquisition is subject to the approval of the competition
authorities and the fulfilment of the other terms and conditions of the
transaction. The acquisition is estimated to be completed during the first half
of 2016.

Onninen Group's profit performance and financial position*

                             1.10.2014 - 1.1.2014 -
 INCOME STATEMENT              30.9.2015 31.12.2014



 Net sales                         1,438      1,401

 Cost of goods sold               -1,162      1,134

 Gross profit                        277        266


 Employee benefit expenses          -134       -130


 Other operating expenses           -104       -103

 EBITDA                               39         34


 Depreciation                        -11        -11

 EBITA                                28         23

 Amortisation                         -2         -2

 Operating profit                     26         21


 Finance income and expenses           0         -1

 Profit before tax                    25         20

 Income tax                           -8         -6

 Profit for the period                17         14


 BALANCE SHEET                          30.9.2015 31.12.2014



 ASSETS

 Non-current assets

 Intangible assets                             30         29

 Tangible assets                               12         11

 Deferred tax assets                            6          5


 Total non-current assets                      48         45

 Current assets

 Inventories                                  222        206

 Trade receivables                            257        163

 Other receivables                             22         13


 Cash and cash equivalents                      1          1

 Total current assets                         503        382

 TOTAL ASSETS                                 550        427



 EQUITY AND LIABILITIES

 Equity                                       139        131

 Total equity                                 139        131

 Provisions                                     1          1

 Non-current liabilities


 Interest-bearing liabilities                  80         50

 Current liabilities


 Interest-bearing liabilities                  50         53

 Trade payables                               211        144


 Other non-interest-bearing liabilities        67         47

 Deferred tax liabilities                       3          2


 Total current liabilities                    331        246


 TOTAL EQUITY AND LIABILITIES                 550        427


*The information in the pro forma income statements and balance sheets is
unaudited and derived from Onninen Group's management reporting.

Briefing in Finnish at Kesko today, Tuesday, 12 January 2016 at 11.00
Kesko will hold a briefing on the acquisition today at 11.00 in the auditorium
at Ankkurikatu 5, Helsinki (Katajanokka). The briefing can be viewed on webcast
at www.kesko.fi.

Audio conference in English today, Tuesday, 12 January 2016 at 14.30
An English-language audio conference on the acquisition will be held today at
14.30 (Finnish time, EET). The audio conference login is available at
www.kesko.fi.

Further information:
Terho Kalliokoski, President, home improvement and speciality goods trade
division, tel. +358 105 320 200, terho.kalliokoski@kesko.fi
Jukka Erlund, Chief Financial Officer, tel. +358 105 322 113,
jukka.erlund@kesko.fi
Lauri Peltola, Senior Vice President, communications, corporate responsibility
and stakeholder relations, tel. +358 105 322 400, +358 505 705 606,
lauri.peltola@kesko.fi


Kesko Corporation



Merja Haverinen
Vice President, Group Communications


DISTRIBUTION
NASDAQ OMX Helsinki Ltd
Main news media
www.kesko.fi

Kesko is a Finnish listed trading sector company operating in the grocery trade,
the home improvement and speciality goods trade and the car trade. Its divisions
and chains act in close cooperation with retailer entrepreneurs and other
partners. In 2014, Kesko's net sales were €9.1 billion and the number of
personnel was nearly 20,000. Kesko has over 1,500 stores engaged in chain
operations in Finland, Sweden, Norway, Estonia, Latvia, Lithuania, Russia and
Belarus. Kesko's shares are listed on Nasdaq Helsinki. The company's domicile
and main premises are located in Helsinki. Kesko is the fifth most sustainable
company in the world (The Global 100 Most Sustainable Corporations in the
World). www.kesko.fi

Kesko is the fifth largest operator in the European building and home
improvement trade market. Our retail chains in the sector are K-rauta, Rautia,
Byggmakker, Senukai and OMA. In addition to a strong store network, we serve our
customers with digital services and online stores. In the building and home
improvement trade, we operate in Finland, Norway, Sweden, Estonia, Latvia,
Lithuania, Russia and Belarus. In 2014, the net sales of the building and home
improvement trade were nearly €2.2 billion and the number of personnel nearly
9,000. The building and home improvement trade business is part of Kesko's home
improvement and speciality goods trade division. www.kesko.fi

Onninen offers comprehensive material and information flow solutions to
contractors, industry, public organizations, retailers of technical products and
suppliers. The Finnish company, established in 1913, today employs a total of
around 3,000 people in its operations in Finland, Sweden, Norway, Poland, Russia
and the Baltic countries. In 2014, the group's net sales were €1.5 billion.
www.onninen.fi

Onvest is a Finnish family business, with a history stretching back a century.
Onvest's business areas comprise the Onninen and Are groups, as well as
investment and real estate operations. The Onvest group employs around 5,900
people in eight countries. www.onvest.fi

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