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:: Combination of Metso Minerals and Outotec – Metso Flow Control to Become an Independent Company
Metso and Outotec have agreed to combine Metso Minerals and Outotec to create a leading company in process technology, equipment and services serving the minerals, metals and aggregates industries. The Combined Company, comprising Metso Minerals and Outotec (but excluding Metso Flow Control), will be named “Metso Outotec”. It had illustrative combined sales of €3.9 billion in 2018 (approximately €4.2 billion including the impact of the recently announced acquisition of McCloskey by Metso).
Metso Flow Control will be a pure-play listed entity under the name of Neles with 2018 sales of €593 million.
The combination of Metso Minerals and Outotec is highly complementary and will create a unique company in the industry. Metso Outotec will leverage the strengths of both companies, including technology and R&D, product and process excellence, scale and global service offering footprint. The combination will deliver significant benefits to all stakeholders.
Metso Minerals and Outotec expect to achieve run-rate annual pre-tax cost synergies of at least €100 million, and run-rate annual revenue synergies of at least €150 million, delivering significant value for shareholders.
The recently announced acquisition of McCloskey is expected to complement the business profile of Metso Outotec, expanding and strengthening the aggregates business.
Metso Outotec will benefit from strong free cash flow and a solid capital structure and will aim for an investment grade credit rating in line with the current Metso rating.
The dividend policy for Metso Outotec will be determined by the board of Metso Outotec following completion of the transaction. However, Metso Outotec is expected to have the capacity for an attractive dividend policy, consistent with Metso’s current dividend policy, while maintaining a strong balance sheet.
The combination will be implemented through a partial demerger of Metso, in which all assets and liabilities of Metso that relate to Metso Minerals will transfer to Outotec in exchange for newly-issued shares in Outotec to be delivered to Metso shareholders. Outotec shareholders will continue to own their shares in Outotec.
Upon completion, Metso shareholders will receive 4.3 newly-issued shares in Outotec for each share owned in Metso on the record date. This implies Metso shareholders would own approximately 78.0% of the shares and votes of Metso Outotec, and Outotec shareholders would own approximately 22.0% of the shares and votes of Metso Outotec. In addition, Metso shareholders will retain their current shares in Metso, which will be renamed Neles.
The current CEO of Metso, Mr. Pekka Vauramo, will become Metso Outotec’s CEO, and the current CEO of Outotec, Mr. Markku Teräsvasara, will become the Deputy CEO of Metso Outotec. Ms. Eeva Sipilä will become the CFO and Deputy CEO of Metso Outotec.
The board of Metso Outotec will include board members from both companies. It is proposed that Metso Outotec’s Chairman will be Mr. Mikael Lilius and that the Vice Chairman will be Mr. Matti Alahuhta.
The transaction is unanimously recommended by the boards of Metso and Outotec to their respective shareholders. The transaction is subject to, among other items, approval by a majority of two-thirds of votes cast and shares represented at the respective EGMs of Metso and Outotec in respect of the transaction, and regulatory approvals including competition clearances. As the transaction is proposed to be implemented by way of a partial demerger of Metso, it is also subject to a statutory creditor hearing process of Metso’s creditors.
Shareholders representing 33.6% of the shares and votes of Metso and shareholders representing 24.8% of the shares and votes of Outotec have irrevocably undertaken to vote in favor of the transaction.
Metso Outotec will apply and seek to develop the sustainability agendas of Metso and Outotec across the enlarged group.
A €1.55 billion backup and term loan facilities agreement has been entered into with Nordea Bank Abp initially for the benefit of Metso but which, upon completion of the transaction, will transfer to Metso Outotec to address certain potential financing and refinancing needs arising from or in connection with the transaction.
Metso Outotec’s headquarters will be in Helsinki, Finland and it will maintain its listing on Nasdaq Helsinki.
Completion is expected in the second quarter of 2020, subject to the approval of the transaction by the EGMs of both Metso and Outotec, the statutory creditor hearing process and receipt of all required regulatory and other approvals.
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