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31 January 2012 at 10.30 pm EET
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- Outokumpu Board of Directors has today approved the
proposed combination of Outokumpu with Inoxum, the stainless
steel unit of ThyssenKrupp
- Transformational deal structured to unlock significant
value through a step-change in the combined entity's
operational efficiency
- The combination is structured to create significant annual
cost synergies of €225-250 million on an annual basis by
2017, at the latest, of which 45% are expected to be achieved
by end of 2014 and 70% by end of 2015
- The transaction values Inoxum at an enterprise value of
€2.7bn
- Consideration for Inoxum will comprise cash, shares in
Outokumpu, a loan note to be issued to ThyssenKrupp and the
assumption by Outokumpu of certain liabilities of Inoxum
- Outokumpu will conduct a rights issue of €1 billion
which is fully underwritten through a combination of
irrevocable subscription commitments from Solidium, KELA and
Ilmarinen, representing 37% of the rights issue, and
underwriting commitments from J.P. Morgan and Nordea
- ThyssenKrupp will hold 29.9% of Outokumpu following a
directed share issue at closing of the transaction
- The combined entity will operate under the name of
Outokumpu, which will continue to be headquartered in Espoo,
Finland and listed on NASDAQ OMX Helsinki. Mika Seitovirta
will continue as CEO of the combined entity
- The transaction has also been approved by the Supervisory
Board of ThyssenKrupp
The Board of Directors of Outokumpu has today approved the
proposed combination of Outokumpu and Inoxum, the stainless
steel unit of ThyssenKrupp. The transaction is designed to
create a new global leader in stainless steel under the
operational leadership of Outokumpu. The transaction values
Inoxum at an enterprise value of €2.7 billion based on
Outokumpu's share price of €7.36 as of close on 30
January 2012. Consideration for Inoxum will comprise a cash
payment of €1 billion, new Outokumpu shares issued to
ThyssenKrupp, a loan note of €235 million to be issued to
ThyssenKrupp and the assumption by Outokumpu of certain
liabilities of Inoxum of €422 million.
In connection with the transaction, Outokumpu will conduct a
fully underwritten rights issue of €1 billion. Solidium, a
Finnish government-owned investment company holding
approximately 31% of Outokumpu's share capital, KELA and
Ilmarinen have irrevocably committed to subscribe to 37% of
the rights issue. The remainder has been underwritten by J.P.
Morgan and Nordea, subject to customary terms and conditions.
ThyssenKrupp will hold a 29.9% interest in Outokumpu,
following a directed share issue at closing of the
transaction. The transaction has been approved by the Board
of Directors of Outokumpu and the Supervisory Board of
ThyssenKrupp, and is expected to be completed during 2012.
The completion of the transaction is subject to certain
closing conditions, including regulatory approvals. In
addition, shareholders of Outokumpu will have to authorise
the Board of Directors of Outokumpu to issue new shares in
the rights issue and in the directed issue to ThyssenKrupp at
closing of the transaction.
"This is a truly transformational deal," said Mika
Seitovirta, CEO of Outokumpu. "We are forming a new
global leader in stainless steel, and are creating added
value for our customers and shareholders. Outokumpu and
Inoxum are an excellent fit - we are combining two highly
complementary businesses to create tremendous synergy
potential that neither company could realise on its
own," explained the Outokumpu CEO. "Outokumpu will
be an efficient, innovative and reliable partner for its
customers, and will offer enhanced stability and attractive
development prospects to its employees," Seitovirta
continued.
"The combination of Inoxum and Outokumpu is an important
milestone in the implementation of our strategic way
forward," said Dr. Heinrich Hiesinger, CEO of
ThyssenKrupp. "The transaction is based on a compelling
industrial rationale that is expected to enable the combined
entity to compete more effectively in the global marketplace.
We believe that the transaction opens up a promising
perspective and is therefore also in the best interest of
Inoxum's employees. ThyssenKrupp will improve its
financial flexibility thanks to this transaction and further
sharpen its profile, bringing us one step closer to our
target of a diversified industrial group." commented
Heinrich Hiesinger, CEO of ThyssenKrupp.
"I am very pleased with this strategic transaction as it
unlocks significant shareholder value. I have full confidence
in the management team of the combined business to drive
Outokumpu's growth in the global stainless steel
industry," said Ole Johansson, Chairman of the Board of
Outokumpu.
Headquartered in Espoo, Finland and listed on NASDAQ OMX
Helsinki, the combined entity, under the name Outokumpu, will
continue to be led by Outokumpu CEO, Mika Seitovirta.
Following completion of the transaction, ThyssenKrupp will
seek one seat on Outokumpu's Board of directors and
nomination committee, which Solidium has agreed to
support.
Creating a new global leader in stainless steel
The combination of Outokumpu and Inoxum will create a new global leader in stainless steel[i]
with a complementary and innovative product offering across key customer segments. As of 30 September 2011, the combined entity would have had annualised sales of €11.8 billion
[ii], approximately 19,000 employees, global market share of approximately 14%[iii] and annual cold rolling capacity of approximately 3.5 million tons.
The transaction is expected to create significant cost
synergy benefits that are estimated to reach € 225-250
million on an annual basis by 2017, at the latest, with 45%
expected to be achieved by end of 2014 and 70% by end of
2015. Following completion of the transaction, Outokumpu is
expected to have the scale and financial strength to take
advantage of a range of global growth opportunities.
These opportunities include an expansion in the Americas
enabled by the state-of-the-art and cost-effective Calvert,
US production facility that is scheduled to be fully
commissioned in December 2012 with a 1Mt meltshop and a 350kt
cold rolling mill. The transaction will also allow Outokumpu
to expand its existing presence in China, one of the
fastest-growing regions in the stainless steel industry. At
the same time, Outokumpu will continue the upstream
integration at Tornio, Finland, doubling its in-house
production of ferrochrome by 2015, which is expected to
provide a considerable profit opportunity for the combined
business.
Optimising global production efficiency and capacity
utilisation leading to increased profitability
The transaction is designed to enable a strategic
optimisation of production capacities, production locations
and supply routes, which would permit higher utilisation
rates at the two highly integrated and cost-efficient mills
in Tornio, Finland and Terni, Italy. In addition, the
combined entity is planning to expand cold rolling capacity
in Krefeld, Germany, to ensure high quality and short lead
times for deliveries in Europe. This balanced set-up of
integrated mills and cold rolling capacity in close proximity
to customers is designed to provide a highly cost-efficient
and responsive production network for high volume stainless
steel grades in Europe.
In order to achieve the targeted efficiency increases, the combined entity plans to reduce its melting capacity by approximately 1.4Mt. Outokumpu, ThyssenKrupp and the German labour representatives have reached an agreement over the production facilities and employment protection in Germany. According to the agreement, the Krefeld meltshop will be shut down by the end of 2013 and it is envisaged that the meltshop in Bochum[iv]
will be closed by the end of 2016. The agreement also states that there will be no compulsory redundancies in the German production sites of Inoxum until the end of 2015. ThyssenKrupp has committed to offer alternative jobs within ThyssenKrupp for up to 600 of the current Inoxum employees in Germany.
Furthermore, the combined entity plans to reduce thin cold
rolling capacity in Sweden from 2014 onwards. Additional
synergy benefits will be sought in the sales, service
centres, sourcing, logistics and support functions of the
combined group.
The overall global restructuring efforts are expected to
result in a reduction of approximately 1,500 jobs between
2013 and 2016, out of which up to 850 jobs would be in
Germany. These measures will strengthen the combined
entity's financial profile, in turn, providing greater
job security for the remaining combined workforce. The above
mentioned planned changes will be conducted in a socially
responsible manner whilst limiting impact on existing
customers.
Complementary product offering
Outokumpu and Inoxum are highly complementary in terms of
product offering. Outokumpu is a leader in high value added
austenitic and duplex grades. In addition to austenitic
grades, Inoxum is a leader in ferritic grades and a leading
supplier of sophisticated high performance alloy products.
This, coupled with its extensive network of local service
centres, will enable the combined entity to supply a broad
product offering with shorter delivery times and customised
solutions for its customers globally. In addition, it will
provide a strong diversification across different grades
reducing volatility from any temporary shifts in demand
between grades.
Following completion of the transaction, Outokumpu will also
have a global and well-balanced customer base, covering key
end-user segments. Outokumpu is an established supplier to
capital goods industries, while Inoxum is a leading supplier
to more consumer-driven segments such as the white goods,
catering and automotive industries. This well-balanced
customer base provides the combined entity with reduced
exposure to volatility of individual industries going
forward.
The combined entity also expects to have greater stability as
a result of long-term contracts with end-user customers while
short-term contracts with its distributor customers will
provide higher volumes.
Unique range of growth opportunities driving long-term value
creation
The transaction is also designed to enable the combined
entity to take advantage of multiple growth
opportunities.
First, Outokumpu is committed to continue its on-going €440
million investment to double its ferrochrome production to
530,000 tons by 2015 at the Tornio mill. This unique upstream
integration to the Kemi chromite mine and own ferrochrome
production provides Outokumpu with a significant competitive
advantage and profit potential.
Second, the combined entity is expected to benefit from the
nearly completed €1.2 billion investment in the highly
integrated and cost competitive Calvert facility in the US
(approximately €300 million remaining in 2012). This
state-of-the art plant, complemented by the Mexinox facility
in Mexico, is expected to enable the combined entity to
further expand its presence in the attractive Americas
region.
Third, the combined entity plans to continue the on-going
€240 million investment programme in Krefeld, Germany, with a
view to making it the centre of excellence for cold rolling
and high quality ferritic grades in Europe. The combined
entity also plans to continue the on-going €90 million
investment programme in high performance alloys (HPA) in
Germany, to take advantage of this high-potential growth
segment.
Fourth, the ongoing expansion of quarto plate capacity and
capability in Degerfors in Sweden will broaden the combined
entity's offering in high-margin special grades. The
total annual production capacity is expected to increase to
220 000 tonnes by 2014.
Finally, through the combined entity's existing presence
in Asia, including a cold rolling mill and a service centre
in China, Outokumpu expects to be able to take part in growth
opportunities in the region through a differentiated high
quality special grades offering.
Strengthening the financial profile of Outokumpu
The transaction is expected to create significant run-rate
cost synergies for the combined entity. Cost synergy benefits
are estimated to reach €225-250 million annually by 2017, at
the latest, of which 45% are expected to be achieved by end
of 2014 and 70% by end of 2015. The transaction is expected
to result in cumulative non-recurring cash costs of €160
million spread over 2013 to 2016.
The EBITDA impact from synergies, together with the benefits
of current restructuring and investment programmes at
Outokumpu and Inoxum, and issuance of new shares by way of
the rights issue and the directed issue to ThyssenKrupp, are
expected to lead to an improvement in the future gearing
ratio for Outokumpu. The gearing of the combined entity is
expected to fall below the Outokumpu target level of 75%
compared to the current Outokumpu stand-alone gearing of
above 80%.
Transaction details and financing
The total consideration for Inoxum is comprised of a cash
payment of €1 billion, new Outokumpu shares to be issued to
ThyssenKrupp at the closing of the transaction, a loan note
of €235 million to be issued to ThyssenKrupp based on
Inoxum's balance sheet as of 30 September 2011 which will
be adjusted for Inoxum's cash flow (from 30 September
2011 to closing), the assumption of Inoxum's pension
obligations of €271 million and of Inoxum's net external
financial debt of €151 million. Following completion of the
transaction, ThyssenKrupp will hold 29.9% of Outokumpu's
issued share capital. ThyssenKrupp has agreed to a lock-up
period of 12 months for 100% of its holding post closing of
the transaction and for another 12 months after that for 50%
of its total holding, in addition to a standstill of 36
months from the day the transaction closes.
Based on Outokumpu's closing share price of €7.36 on 30
January 2012 and a rights issue of €1 billion, the implied
value of shares being issued to ThyssenKrupp would be €998
million and the implied value of the total consideration for
Inoxum would be approximately €2.7 billion. These
consideration calculations do not take into account the value
of the estimated synergies.
In connection with the transaction, Outokumpu will conduct a
fully underwritten rights issue of €1 billion. Solidium,
holding approximately 31% of Outokumpu's share capital,
KELA and Ilmarinen have irrevocably committed to subscribe to
37% of the rights issue. The remainder has been underwritten
by J.P. Morgan and Nordea, subject to customary terms and
conditions. The loan note to be issued by Outokumpu to
ThyssenKrupp as part of the consideration has a maturity of 9
years and will be subordinated to certain other existing
forms of indebtedness at Outokumpu. The loan note will be
adjusted with Inoxum's cash flow (from 30 September 2011
to closing), which will be driven by Inoxum's operational
performance including capex spending and working capital
changes. The structure of the loan note and its long-term
tenor are designed to provide Outokumpu with significant
financial flexibility over the coming years.
Outokumpu's committed liquidity facilities and other
existing funding programme (as of year end 2011) in total are
approximately €1.3 billion.
Transaction conditions and timeline
The closing of the transaction is subject to certain closing
conditions, including regulatory approvals.
Shareholders of Outokumpu will have to authorise the Board of
Directors of Outokumpu to effect the issue of new shares in
the rights issue and in the directed issue to ThyssenKrupp.
These authorisations will be sought at Outokumpu's
Extraordinary General Meeting ('EGM') scheduled to be
held on 1 March 2012.
The board of directors of Outokumpu is expected to decide on
the timing, terms and conditions of the rights issue based on
the authorisation to be sought by the EGM. The rights issue
is expected to be completed during the first half of the year
2012.
The directed share issue of Outokumpu to ThyssenKrupp will
take place as part of the consideration at closing, expected
to take place by the end of 2012.
The financial advisers of Outokumpu are Perella Weinberg
Partners, J.P. Morgan and Nordea. Skadden Arps and White &
Case act as legal advisers.
Overview of Inoxum
Inoxum is a leading European stainless steel producer
employing approximately 11,500 people globally. Inoxum
comprises of two segments: the Stainless Steel segment
produces and distributes stainless steel flat products. The
High Performance Alloys segment brings together the
production and distribution of high-performance materials
such as nickel alloys, titanium and zirconium.
Inoxum key financials (fiscal year ending Sep 30th)
2009/2010 | 2010/2011 | |
Sales** (million €) | 5,901 | 6,739 |
Adj. EBITDA* (million €) | 97.4 | 176.5 |
Adj. EBIT** (million €) | (63.1) | (287.4) |
Deliveries (million tons) | 2,1 | 2,0 |
Total Assets** (million €) | 5,396 | 6,722 |
*Adj. EBITDA equals adj. EBIT plus amortization /
depreciation plus impairment minus depreciation of
capitalised borrowing costs eliminated in EBIT
** As presented in the Combined Financial Statements of
Inoxum Group
Investor and analyst call today
Outokumpu will host an investor and analyst conference call
and live webcast concerning the transaction and the Outokumpu
2011 annual accounts on 1 February 2012 at 9:00 am CET (8:00
am GMT, 10:00am EET). To participate, see further details at
www.Outokumpu.com/Investors.
To participate via conference call, please dial in 5-10
minutes before the beginning of the event:
Finland +358 (0)9 2310 1619
Germany +49 (0)69 2999 3285
UK +44 (0)20 3106 7162
Sweden +46 (0)8 5593 6763
Participant code: 9353419
Password Outokumpu
Outokumpu and ThyssenKrupp joint press conference and live
webcast tomorrow at 11:00am CET
To participate via conference call, please dial in 5-10
minutes before the beginning of the event:
Finland +358 (0)9 2310 1618
Germany +49 (0)30 3001 90531
UK +44 (0)20 7660 0009
Sweden +46 (0)8 5065 3933
Password: Outokumpu
If you wish to listen to the conference in English, please
use the following confirmation code: 6345244
If you wish to listen to simultaneous translation in German,
please use the following code: 4654948.
The press conference can be viewed live via Internet at www.Outokumpu.com/press or www.thyssenkrupp.com. An on-demand webcast of the press conference will be made available as of 1 February 2012 at www.outokumpu.com/inoxum
Outokumpu Contacts
Media interview requests - International
Tel. +49 (69) 2400 5533 (Brunswick)
Media interview requests - Finland
Kari Tuutti - Tel. +358 9 421 2432
Investor and analyst enquiries
Ingela Ulfves - Tel. +358 40 515 1531
About Outokumpu
Outokumpu is a global leader in stainless steel with the
vision to be the undisputed number one. Customers in a wide
range of industries use our stainless steel and services
worldwide. Being fully recyclable, maintenance-free, as well
as very strong and durable material, stainless steel is one
of the key building blocks for sustainable future. Outokumpu
employs over 8, 000 people in more than 30 countries. The
Group's head office is located in Espoo, Finland.
Outokumpu is listed on NASDAQ OMX Helsinki
For further details please visit www.outokumpu.com
Disclaimer
The information contained herein is not for publication or
distribution, directly or indirectly, in or into the United
States, Canada, Australia, Hong Kong, South Africa or Japan.
These written materials do not constitute an offer of
securities for sale in the United States, nor may the
securities be offered or sold in the United States absent
registration or an exemption from registration as provided in
the U.S. Securities Act of 1933, as amended, and the rules
and regulations thereunder. There is no intention to
register any portion of the offering in the United States or
to conduct a public offering of securities in the United
States.
The issue, exercise or sale of securities in the offering are
subject to specific legal or regulatory restrictions in
certain jurisdictions. The Company assumes no
responsibility in the event there is a violation by any
person of such restrictions.
The information contained herein shall not constitute an
offer to sell or the solicitation of an offer to buy, nor
shall there be any sale of the securities referred to herein
in any jurisdiction in which such offer, solicitation or sale
would be unlawful prior to registration, exemption from
registration or qualification under the securities laws of
any such jurisdiction. Investors must neither accept any
offer for, nor acquire, any securities to which this document
refers, unless they do so on the basis of the information
contained in the applicable prospectus published or offering
circular distributed by Outokumpu.
Outokumpu has not authorized any offer to the public of
securities in any Member State of the European Economic Area
other than Finland. With respect to each Member State of the
European Economic Area other than Finland and which has
implemented the Prospectus Directive (each, a "Relevant
Member State"), no action has been undertaken or will be
undertaken to make an offer to the public of securities
requiring publication of a prospectus in any Relevant Member
State. As a result, the securities may only be offered in
Relevant Member States (a) to any legal entity which is a
qualified investor as defined in the Prospectus Directive; or
(b) in any other circumstances falling within Article 3(2) of
the Prospectus Directive. For the purposes of this paragraph,
the expression an "offer of securities to the
public" means the communication in any form and by any
means of sufficient information on the terms of the offer and
the securities to be offered so as to enable an investor to
decide to exercise, purchase or subscribe the securities, as
the same may be varied in that Member State by any measure
implementing the Prospectus Directive in that Member State
and the expression "Prospectus Directive" means
Directive 2003/71/EC (and amendments thereto, including the
2010 PD Amending Directive, to the extent implemented in the
Relevant Member State), and includes any relevant
implementing measure in the Relevant Member State and the
expression "2010 PD Amending Directive" means
Directive 2010/73/EU.
This communication is directed only at (i) persons who are
outside the United Kingdom or (ii) persons who have
professional experience in matters relating to investments
falling within Article 19(5) of the Financial Services and
Markets Act 2000 (Financial Promotion) Order 2005 (the
"Order") and (iii) high net worth entities, and
other persons to whom it may lawfully be communicated,
falling within Article 49(2) of the Order (all such persons
together being referred to as "relevant persons").
Any investment activity to which this communication
relates will only be available to and will only be engaged
with, relevant persons. Any person who is not a relevant
person should not act or rely on this document or any of its
contents.
This communication includes forward-looking statements within
the meaning of the securities laws of certain applicable
jurisdictions. These forward-looking statements include, but
are not limited to, all statements other than statements of
historical facts contained in this communication, including,
without limitation, those regarding Outokumpu's and the
combined entity's strategy, plans, objectives, goals and
targets, future developments in the markets in which Inoxum
and Outokumpu participate or are seeking to participate. By
their nature, forward looking statements involve known and
unknown risks, uncertainties and other factors because they
relate to events and depend on circumstances that may or may
not occur in the future. Outokumpu cautions you that
forward-looking statements are not guarantees of future
performance and are based on numerous assumptions and that
its actual results of operations, including their financial
condition and liquidity and the development of the industries
in which it and Inoxum and the members of their group
operate, may differ materially from (and be more negative
than) those made in, or suggested by, the forward-looking
statements contained in this communication. In particular,
this communication includes forward-looking statements
relating to synergy benefits estimates expected to arise from
the transaction discussed herein. Such estimates are based on
a number of assumptions that are based on currently available
information and judgments based on such information. These
assumptions present the expected course of action and the
estimated future impact of the transaction and the
integration of Inoxum into Outokumpu on the combined
entity's business, financial condition and results of
operations. However, these assumptions are inherently
uncertain and subject to a wide variety of significant
business, economic and competitive risks and uncertainties
that could cause actual results to materially differ from
those contained in the synergy benefit estimates. Further,
there can be no certainty that the transaction will be
completed in the manner described in this presentation, or at
all.
Based on 2011 annual cold rolling capacity according to
CRU as of November 2011, giving full effect to new Calvert
mill which is expected to start operation in Q4 2012.
Combined for the12 months ended September 30, 2011
Based on 2010 calendar year shipments of Inoxum of CR
incl. precision strip, on unconsolidated General and
Specialty Stainless segment shipments of Outokumpu for
calendar year 2010 and on global CR stainless steel
consumption in 2010 estimated by CRU in their November 2011
report
Bochum meltshop economic viability will be reviewed
prior to final decisions on closure.
distribué par | Ce noodl a été diffusé par Outokumpu Oyj et initialement mise en ligne sur le site http://www.outokumpu.com. La version originale est disponible ici. Ce noodl a été distribué par noodls dans son format d'origine et sans modification sur 2012-01-31 21:35:19 PM et restera accessible depuis ce lien permanent. Cette annonce est protégée par les règles du droit d'auteur et toute autre loi applicable, et son propriétaire est seul responsable de sa véracité et de son originalité. |