SKEL fjárfestingafélag hf.: Statement signed for the exploratory merger negotiations of Samkaup, Heimkaup, and Orkan.

SKEL fjárfestingafélag hf. ("SKEL") and Samkaup hf., id. 571298-3769 ("Samkaup") have signed a joint statement on the launch of exploratory negotiations toward a potential merger between Samkaup and certain companies in the SKEL group.

Samkaup operates 64 grocery stores across Iceland with four brands (Samkaup,  Nettó, Kjörbúðin and Iceland), ranging from discount to convenience stores.

Orkan IS ehf. ("Orkan") operates 72 fuel stations, 14 car washing stations under the Löður brand, 6 fast charging stations, 2 hydrogen stations, and 1 methane station. In addition to this, the company owns 32 properties and lots throughout the country, along with other assets.

Heimkaup ehf. ("Heimkaup") which operates 7 pharmacies under the Lyfjaval brand and 9 convenience stores under the 10-11, Extra and Orkan brands, as well as other properties.

SKEL believes that merging the companies will create a financially robust company with a strong market share in key markets that have essential products.

Retail (food): Samkaup has a wide-reaching network and a strong position in many parts of the country. The parties estimate that Samkaup's turnover could significantly increase with the addition of Heimkaup's retail units. The merger would result in great synergy opportunities for both companies, enabling them to invest and strengthen their positions in the fiercely competitive retail market.

Fuel, charging stations and washing: Orkan has a strong market share in the fuel market and strives to become a leader in energy transition. Löður also has a strong position in the car wash market.

Drugs and medicine: Lyfjaval is the only company that operates drive-through drug stores. The company has ambitious plans for growth and aims to differentiate itself in the market. There is a growing demand for this service, and the company plans to respond to it.

The parties have agreed to exclusivity for the duration of the exploratory negotiations. The expected date for the results of these negotiations is 22 March 2024, at the latest. If the parties agree to proceed with the merger, they will sign a term sheet outlining the main terms, after which formal negotiations will commence.

Ásgeir Helgi Reykfjörð Gylfason, CEO of SKEL:

"SKEL sees great potential in the merger of Samkaup, Orkan, Lyfjaval, Löður and Heimkaup. The combined entity would be financially robust, with an optimal distribution of income and around 150 outlets spread across the country. The merger would generate an annual turnover of around 80 billion and would enable the company to capitalize on the current retail market trends to benefit its customers, employees, and shareholders. SKEL believes that the merged company would be an interesting investment option, and listing its shares on the Nasdaq Iceland Main Market would be an optimal choice.

Furthermore, it is essential that the combined company preserves its current values and roots and continues to cater to the distinct requirements of its customers while remaining actively involved in regional and local communities throughout the country.”

For more information, please contact Ásgeir Helgi Reykfjörð Gylfason at fjarfestar@skel.is"?