‘Industry-shaping’ merger launched between Metso and Outotec

Metso and Outotec are merging to create a “leading company in process technology, equipment and services” for the minerals, metals and aggregates industries.

The combined company – called Metso Outotec – is set to become a giant of the industry, highlighted by sales of €3.9 billion ($6.26 billion) between them in 2018.

The merger will allow the new company to leverage off the strengths of Metso and Outotec, including technology and research and development, product and process excellence as well as a global footprint.

It intends to benefit from a presence across a large number of geographic markets and knowledge across a range of mineral applications, particularly copper and high growth minerals that are used in the battery technology industry.

Outotec chairman Matti Alahuhta said the merger represented a key moment in the industry, with the new company capable of leveraging off the strengths of both parties.

“This is an industry-shaping combination that joins two uniquely complementary companies, it builds on Outotec’s leading technology competencies and Metso’s excellent service capabilities,” he said.

“Metso Outotec will be in an excellent position to take advantage of market opportunities globally, which together with the significant synergies, will drive strong shareholder value.”

Metso chief executive officer Pekka Vauramo reciprocated his excitement regarding the deal, commenting on the significant contribution Metso would bring to the merger.

“Metso Outotec will have capabilities that will enable us to drive sustainable growth, while providing our customers with high-quality technology, equipment and services that will ultimately improve their businesses,” he said.

“We also have excellent people – the best talent in the industry. I am therefore eagerly waiting to join with Outotec’s personnel to begin our exciting journey together”

A services arm of Metso, Metso Flow Control will become a separately listed and independent flow control equipment and services company under the name Neles as part of the agreement.

Metso chairman Mikael Lilius said the timing was right to establish a focused standalone flow control company given Neles’ product portfolio and service offering.

“Neles will have the means to capitalise on both organic and inorganic growth opportunities while continuing to focus on our customers’ needs and delivering intelligent solutions,” he said.

“I am confident that a focused flow control company with an attractive product offering, proven track-record of strong performance and compelling growth prospects will unlock further value for Metso’s current shareholders and new investors alike.”

The announcement follows Metso’s recent acquisition of screening and crushing equipment company McCloskey International, which is set to complement Metso Outotec’s aggregate business.

Combining the companies is set to 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 share in Outotec to be delivered to Metso shareholders.

Upon completion, Metso shareholders will receive 4.3 newly-issued shares in Outotec for each share owned in Metso on the record date.

The agreement implies that Metso shareholders will own 78 per cent of the shares and votes of Metso Outotec and Outotec shareholders will have around 22 per cent.

Structurally, the current chief executive officer of Metso, Pekka Vauramo is set to become the chief executive officer of Metso Outotec, while current chief executive officer of Outotec Markku Terasvasara will become the deputy chief executive officer.

The board of the combined company will include board members from both companies, with the transaction being unanimously recommended by the boards of Metso and Outotec.

A €1.55 billion backup and term loan facilities agreement has been entered into with Nordea Bank Abp initially for the benefit of Metso.

Upon completion of the transaction, this will transfer to Metso Outotec to address certain potential financing and refinancing needs arising in connection with the transaction.

The new Metso Outotec headquarters will be in Helsinki, Finland with completion of the deal expected in the second quarter of 2020.

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