Kesko to acquire Onninen and strengthen building and technical trade position

Finnish retail group Kesko Corporation has entered into an agreement to acquire the entire share capital of Onninen Oy, a wholesale company in the building and technical trade sector, from Onvest Oy. The transaction price for the debt-free acquisition is €369 million.

The acquisition aims to bolster Kesko's position in the building and technical trade market in Finland and expand its operations across Europe. Kesko anticipates significant synergy and scale benefits from the purchase, particularly in purchasing, logistics, and procurement. The move is expected to substantially increase Kesko's business-to-business (B2B) sales.

Prior to the acquisition, B2B sales accounted for over 40 percent of the K Group's building and technical trade revenue. Following the integration of Onninen, this share is projected to rise to approximately 60 percent. Kesko estimates achieving annual synergies of around €30 million at the EBITDA level starting from 2020.

The deal encompasses Onninen's operations in Finland, Sweden, Norway, Poland, and the Baltic states, but excludes the company's steel business and its Russian subsidiary. The acquisition will significantly broaden Kesko's product offering, especially in HVAC and electrical products, and aims to secure new customer relationships in the infrastructure and industrial sectors.

The completion of the acquisition is subject to approval from competition authorities and the fulfillment of other customary closing conditions. Kesko expects the transaction to be finalized during the first half of 2016. Onninen reported net sales of €1,438 million and EBITDA of €39 million for the period from October 2014 to September 2015.