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Rapala to Acquire Luhr-Jensen

Rapala has finalized the acquisition of lures and other fishing tackle business of Luhr Jensen & Sons, Inc. ("Luhr Jensen"), a Hood River, Oregon based manufacturer of fishing lures and accessories. The consideration of the deal comprises of cash and newly issued shares of Rapala. It is expected that this acquisition will be accretive to Rapala shareholders.

Founded in 1932, Luhr Jensen manufactures a wide range of lures for freshwater and saltwater species, including the Kwikfish, Krocodile, J-Plug and Hot Shot. Luhr Jensen is one of the five largest lure companies in the USA and is the market leader in the Pacific Northwest, Alaska and in British Columbia, Canada. The brand is particularly well known in market segments, which target species such as salmon, trout and steelhead. The company also sells a line of cooking products, which are not included in the acquisition. Luhr Jensen employs more than 250 people in Hood River and Mexico. The net sales of its lure and fishing tackle business were in excess of $9 million in the financial year ended in June 30, 2005.

"Luhr Jensen is an ideal fit for the Rapala family of brands," said Jorma Kasslin, CEO of the Rapala VMC Group. "Their products have a great reputation with anglers and are widely known for their quality craftsmanship. We intend to take this quality brand to the global marketplace via our network of group distribution companies. In addition, with Rapala and Luhr Jensen combined, we are definitely the world’s largest manufacturer of metal fishing lures."

"It was a difficult decision to sell the company that was founded by my father more than 70 years ago," said Phil Jensen, President of Luhr Jensen. "But the decision was made easier knowing that the Luhr Jensen traditions of dedication, quality and service will continue under Rapala’s leadership." Phil Jensen will continue as a consultant to the Rapala Group and board member of Normark USA, the Group’s wholly owned US distribution company.

Luhr Jensen will join Rapala, Storm, Blue Fox, VMC and Williamson in the Rapala family of brands. Future plans include transferring production of Luhr Jensen products to the Rapala factories.

This acquisition is part of Rapala’s strategy for profitable growth. It contributes to the Group’s brand strategy and portfolio while it leverages Rapala’s unique manufacturing and distribution platforms.