The agreement covers Profiles and Building System, as well as Extruded and Welded tubes, of Orkla's fully-owned Sapa and all of Hydro's Extruded Products business area. Based on 2011 figures, the combined company will have around NOK 47 billion in annual revenues, underlying EBITDA of around 1.9 billion and approximately 25,000 employees.*
The new company will have leading positions in Europe and North America, and strong footholds in emerging markets, including Brazil, Argentina, China, India and Vietnam.
Completion of the transaction is expected to take place in the first half of 2013, following approvals from relevant competition authorities. Svein Tore Holsether, currently CEO of Sapa, will be President and CEO, and Arnstein Sletmoe, currently Senior Vice President and Head of Mergers & Acquisitions in Hydro, will be appointed CFO of the merged company. President and CEO of Hydro, Svein Richard Brandtzæg, will be the chairperson of the company. Sapa will have its headquarter in Oslo, Norway.
"Together we are creating a stronger company with a broader competence base and a highly experienced management team. In today's very challenging market conditions, the combined company will be better positioned for restructuring and value creation. This will strengthen Orkla's ability to successfully capture the value potential of our aluminium business," says Orkla's President and CEO Åge Korsvold.
"The new company will have the necessary strength to meet current challenging markets and create a platform for future growth in emerging markets," says Hydro's President and CEO Svein Richard Brandtzæg.
SIGNING: The signing took place at Hydro's Vækerø Mansion in Oslo, Norway, on Sunday evening, October 14. At left, Åge Korsvold, President and CEO of Orkla, and Svein Richard Brandtzæg, President and CEO of Hydro. (Photo: Halvor Molland) |
"This transaction will contribute to strengthening Hydro as a world-leading, resource-rich aluminium company with robust activities across the value chain. Through the combination with Sapa, Hydro is establishing a new structure for its extrusion business positioned for improved profitability and potential for future growth," he says.
As part of the agreement, Hydro (through Hydro Aluminium AS) and Orkla (through Sapa Holding AB) will contribute their relevant businesses to the new company in return for shares on a 50/50 basis. To compensate for the difference in size and to harmonize certain balance sheet items, Orkla will, in addition to its 50 percent ownership, receive the amount of NOK 1.8 billion from the new company. The amount is expected to be paid within 6 months of completion.
Significant improvement efforts are ongoing in both entities and will, together with assumed annual synergies of around NOK 1 billion, contribute to further strengthening the new company. On a global basis, demand for extruded aluminium applications is expected to continue its strong underlying growth.
CEREMONY: Sitting, Åge Korsvold (at left), President and CEO of Orkla, and Svein Richard Brandtzæg, President and CEO of Hydro. Standing, Jørgen C. Arentz Rostrup, Hydro CFO, Arnstein Sletmoe, head of Hydro M&A, Svein Tore Holsether, CEO of Sapa, Terje Andersen, Orkla CFO, and Gustaf Christensen, head of Orkla M&A. (Photo: Halvor Molland) |
"Aluminium is the material of the future. To meet customers' high demands, we need to continue to excel in R&D, deliver with precision and optimize our global footprint. Both entities have demonstrated their ability to increase quality and efficiency, and together we are determined to bring out the best of the two companies into one," says Svein Tore Holsether, President and CEO of Sapa.
The agreement contains provisions whereby either party may initiate an initial public offering (IPO) process after approximately three years from closing, and where each party can decide to retain 34 percent.
The new joint venture will be presented as an associated company according to the equity method.
*) Illustrative figures for the new company 2011, unaudited
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Investor contacts
Contact: Rikard Lindqvist
Cellular: +47 41751199
E-mail: Rikard.Lindqvist@hydro.com
Contact: Stian Hasle
Cellular: +47 97736022
E-mail: Stian.Hasle@hydro.com -
Press contact
Contact: Halvor Molland
Cellular: +47 92979797
E-mail: Halvor.Molland@hydro.com
This announcement and its appendices (collectively, the
"Announcement") has been prepared by Norsk Hydro
ASA ("Hydro") and Orkla ASA ("Orkla")
(jointly referred to as the "Companies") solely
for the use at the announcement held in connection with the
announcement of the combination of Hydro's aluminium
extrusion and building systems business and Orkla's
aluminium extrusion and building systems currently
conducted through Sapa AB, in a 50/50 owned company (the
"Joint Venture").
Statements in this announcement refer to the Joint Venture,
but a combination of said businesses is pending inter alia
regulatory approval and completion of the transactions set
out in the agreement between the parties.
Certain statements included within this Announcement
contain forward-looking information, including, without
limitation, those relating to (a) forecasts, projections
and estimates, (b) statements of Orkla's and
Hydro's objectives and strategies for the Joint Venture
(c) targeted production volumes, capacities or rates,
start-up costs, cost reductions and profit objectives, (d)
various expectations about future developments in relevant
markets, supply and demand, (e) results of operations, ,
(f) growth rates, (h) risk management, as well as (h)
statements preceded by "expected",
"scheduled", "targeted",
"planned", "proposed",
"intended" or similar expressions.
Although the Companies believe that the expectations
reflected in such forward-looking statements are
reasonable, these forward-looking statements are based on a
number of assumptions and forecasts that, by their nature,
involve material risks and uncertainties. Various factors
could cause actual results or other future positions to
differ materially from those projected in a forward-looking
statement or materially affect the extent to which a
particular projection is realized. Factors that could cause
these differences include, but are not limited to, changes
in the availability and cost of energy and raw materials;
global supply and demand for aluminium products; world
economic growth, including rates of inflation and
industrial production; changes in the relative value of
currencies and the value of commodity contracts; trends in
key markets and competition; and legislative, regulatory
and political factors.
No assurance can be given that such expectations will prove
to have been correct. The Companies and the Joint Venture
disclaim any obligation to update or revise any
forward-looking statements, whether as a result of new
information, future events or otherwise.
This Announcement has not been reviewed or approved by any
regulatory authority or stock exchange. This Announcement
is not a prospectus and does not contain the same level of
information as a prospectus.
The contents of this Announcement shall not be construed as
an investment advice. By attending or receiving this
Announcement and/or investing in the shares issued by any
of the Companies, you acknowledge and accept that you will
be solely responsible for your own assessment of the market
and the market position of, and other factors of relevance
to, the Companies and that you will conduct your own
analysis and be solely responsible for forming your own
view of the potential future performance of the respective
Company's business and its shares.
This Announcement speaks as of October 15, 2012.
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