Gränges and Hydro Raufoss merge in plastic systems

Gränges and Hydro Raufoss establish strong new player within plastic systems for the automotive industry Gränges and Norsk Hydro ASA's division Hydro Raufoss Automotive (Hydro Raufoss) have signed an agreement in principle to merge Gränges Autoplastics and Hydro Raufoss Automotive Bumper Systems (Bumper Systems), a unit within Hydro Raufoss. The new company, Autoplastics, will be a strong partner for the automotive industry, with a capacity corresponding to 10 percent of the European market for lacquered bumper systems. Autoplastics to be one of Europe's leading suppliers Through this merger, Gränges actively takes part in creating one of Europe's leading suppliers of plastic systems for interior and exterior applications within the automotive industry. "The new Autoplastics will serve a market in growth. Factors driving this growth include the increasing demand for reduced weight and the trend towards coloured or patterned bodies and interior trim for both passenger cars and trucks. This means that the market for surface- coated plastic components is showing significantly greater growth than the vehicle market itself, measured in terms of the number of vehicles. Autoplastics will be able to offer customers strong commitment, from concept to sequence deliveries of the finished product, and will also contribute substantial know-how within the surface-coating, painting, chromium plating and patterning areas. Gränges' international platform will be expanded through the addition of modern plants in Gothenburg (Sweden) and Gent (Belgium). This will be supplemented by Gränges' own investment in Poland, which is scheduled for completion during the current year. Autoplastics' largest customers are Volvo Car Corporation, Saab, BMW, Audi, Opel, Fiat, Scania, Iveco and Volvo Truck Corporation. The investment in Autoplastics clearly underlines a key goal, which is to develop the business with both existing and new customers," says Gränges Chief Executive Officer, Staffan Bohman. "Through this transaction, we take an active part in the consolidation of the automotive sub-suppliers' market. We hereby create a competitive platform for continued growth within interior and exterior plastics for the automotive industry. The new company will have an interesting customer portfolio and a strong development base. Through the merger, we realise Norsk Hydro's strategy to focus the activities within automotive to development and manufacture of aluminium components and systems," says Arvid Moss, CEO of Hydro Raufoss Automotive. "Norsk Hydro is a leading supplier to the global automotive industry, so the co-operation with Gränges is a perfect fit". Christer Palm, President of the jointly owned Autoplastics Christer Palm has been appointed President of the new Autoplastics. At present, Christer Palm is President of Volvo Car International and was formerly director of purchasing for Volvo Car Corporation. Under the terms of the agreement, Gränges and Hydro Raufoss will form a new, jointly owned company, Autoplastics, in which Gränges will have a 60-percent ownership interest, with Hydro Raufoss holding the remaining 40 percent. The company will have its headoffice in the Gothenburg area. The Board of the new company will consist of five persons, three from Gränges and two from Hydro Raufoss. Exit clauses have been established whereby Hydro Raufoss holds an unconditional sales option and Gränges an unconditional purchase option. The conditions are primarily return-based. The merger is reinforced by the fact that the two operations complement each other both on the production and the customer side. Structural transformation of the automotive industry necessitates strong suppliers The merged entity, Autoplastics, reached sales for 1998 over SEK 2,5 billion. "It is important for Gränges to take an active part in the consolidation of the automotive industry. By strengthening the position as supplier of exterior plastic systems to the automotive industry, Autoplastics get the platform needed to meet international competition. For continued expansion. This applies in particular to painted exterior components. At the same time, we enhance the possibilities to effectively work close to the customers in concept- and product development. The combination creates a Pan-European production organisation with potential for structural rationalisation work," continues Staffan Bohman. Bumper Systems manufactures exterior plastic systems for the automotive industry and supplies bumpers, among other products, to all Volvo models produced in Gothenburg, Uddevalla (Sweden) and Gent, plus spare parts. The company has manufacturing and development units in Gothenburg, Raufoss (Norway) and Gent and has a total of approximately 450 employees. Gränges Autoplastics focuses on the production of interior and exterior plastic components and systems, with a high degree of value-added, for the automotive industry. The business area's operations are established Sweden, Italy, Poland and Finland. Autoplastics' customers include several major European automakers, of which the largest are Audi, BMW, Iveco, Saab, Scania, and Volvo. The company has approximately 1 450 employees. The negotiations are expected to be finished during March and it is expected that the merger will be finalised during spring 1999. The merger is contingent upon the approval of the Boards and relevant authorities. For further information, please contact: Staffan Bohman, President & CEO Gränges, tel +46-8-459 5910, Ulf Berglund, EVP Gränges, tel +46-8-459 5912, Stig Brehmer, EVP Gränges, tel +46-8-459 5913 or Cecilia Lager, Vice President Investor Relations & Communications, tel: +46-8-459 59 41. Gränges is an international industrial group focused on value-added products based on aluminium and plastics. The products range from extrusions, heat transfer material and foil to components and systems in plastics to the transport industry. The group is one of Europe leading companies within its field with customers in the transport, engineering, construction and packaging industries. Gränges is quoted on the OM Stockholm Exchange "O-list".Visit Gränges web site on the Internet: www.graenges.se ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/1999/03/01/19990301BIT00030/bit0001.doc http://www.bit.se/bitonline/1999/03/01/19990301BIT00030/bit0002.pdf