Ontex's Strategic Shift: Selling Turkish Subsidiary to Dilek Grup

Ontex Group NV [EURONEXT: ONTEX], a leading international developer and producer of personal care solutions, has announced a binding agreement to sell its Turkish subsidiary to Dilek Grup. This strategic move aligns with Ontex's refocus on retail and healthcare brands in Europe and North America, aiming to strengthen its position in these core markets. The transaction, expected to be completed in the course of the third quarter of 2025, is subject to approval by the Turkish competition authority.

Ontex's Turkish subsidiary, a leading player in the Turkish and surrounding regions' personal hygiene products market, develops, manufactures, commercializes, and distributes predominantly branded products. With approximately €90 million in sales in 2024 and around 1,400 employees, the business has contributed significantly to Ontex's Emerging Markets division, which has been classified as discontinued operations. The sale of this division will eliminate these discontinued operations from Ontex's financial statements, making it easier for investors to understand and compare the company's performance over time.

Dilek Grup, an established distributor of fast-moving consumer goods across Turkey and neighboring countries, is diversifying into production by acquiring Ontex's manufacturing plant in Istanbul. This acquisition will allow Dilek Grup to strengthen its market position, expand its product portfolio, and tap into established customer bases. With Ontex's Turkish business, Dilek Grup can also expand its reach into new markets, both within Turkey and in neighboring countries, driving growth and increasing revenue.

The transaction is expected to generate a net gain on disposal of approximately €39 million for Ontex, positively impacting its net income and earnings per share. However, the transaction will also trigger the recognition of a non-cash accounting loss of approximately €(140) million related to the accumulated currency translation reserves. This loss is non-cash and will not impact Ontex's operating cash flow or net debt.

Ontex's strategic refocus on core markets is expected to lead to improved operational efficiency and increased profitability. By divesting its Turkish operations, Ontex can concentrate its resources and efforts on its most promising and profitable segments, enhancing its future prospects. The proceeds from the sale, expected to be around €82 million after deductions, will help reduce Ontex's net debt, improving the company's financial health and flexibility.

In conclusion, Ontex's decision to sell its Turkish subsidiary to Dilek Grup is a strategic move that aligns with the company's refocus on retail and healthcare brands in Europe and North America. This transaction is expected to generate a net gain on disposal, reduce Ontex's net debt, and eliminate discontinued operations from its financial statements. With Dilek Grup's expanded product portfolio and strengthened market position, it could become a more formidable competitor in the region, potentially driving innovation and improved product offerings for consumers.