Orkla ASA, a Norwegian company with interests spanning frozen pizza and renewable energy, has hired UBS AG to prepare the sale of its Borregaard chemicals operation this year, a person with knowledge of the plan said.
Orkla is working on the legal framework and paperwork for an initial public offering or outright sale of Borregaard, said the person, who declined to be identified because the process is private. The asset generates annual sales of 4 billion kroner ($687 million) and employs 1,200 people.
The Norwegian parent company faces the challenge of attracting investors or buyers to a chemical company with diversified output spanning specialty cellulose, food ingredients and fine chemicals generated from timber. Turmoil in the financial markets threatens to help derail the sale of Orkla’s Renewable Energy Corp. unit, Orkla Chief Executive Officer Bjoern Wiggen said Jan. 5.
Borregaard CEO Per Sorlie is in the final phase of a cost-cutting program to save 250 million kroner. A sale would mean a separation from Orkla’s hydro-power assets that feed it with electricity, and the parent company has drawn up a 12-year power contract to safeguard supplies and prices.
Orkla spokesman Johan Hovland declined to comment on the plans for Borregaard.