Metsä Group announces Itochu Corporation’s strategic acquisition of 24.9 percent stake in Metsä Fibre
Metsä Group Stock Exchange Release 11 April 2012 at 8.15 am EET
Metsä Group’s parent company Metsäliitto Cooperative (Metsäliitto), M-real Corporation (M-real) and Itochu Corporation (Itochu) have agreed on a transaction in which Itochu will acquire a 24.9 per cent strategic stake in Metsä Fibre Corporation (Metsä Fibre) against cash consideration of EUR 472 million, which corresponds to an enterprise value of EUR 2,040 million for Metsä Fibre.
At the completion of the transaction, Metsäliitto shall exercise the call option on the Metsä Fibre shares owned by UPM-Kymmene Corporation (UPM). The call option price for UPM’s 11.0 per cent shareholding in Metsä Fibre is EUR 150 million as was announced by Metsä Group and UPM on 30 June 2011. As a result of the transactions, Metsäliitto’s ownership in Metsä Fibre will decrease to 50.2 per cent (currently 56.8), M-real’s ownership to 24.9 per cent (currently 32.2), and Itochu will own 24.9 percent of the total share capital of Metsä Fibre.
At the same time, the parties will enter into a commercial arrangement whereby Itochu’s sales agent position in selling Metsä Fibre’s long fibre pulp in Asia and Metsä Fibre’s sales agent position in selling Itochu’s short fibre pulp in Europe will be renewed. The pulp sales included in the arrangement on the part of Metsä Fibre in Asia and on the part of Itochu in Europe amount to 500,000 tons and 150,000 tons per annum respectively.
"Metsä Group and Itochu have been in commercial relationship for decades and the companies have had close marketing and sales co-operation since 2004. The new arrangement is an excellent opportunity for Metsä Group to create more value and stability through co-operation with a strong commercial partner in the growing Asian market and at the same time strengthen our position as one of the leading pulp market operators globally. Both parties can pursue significant synergies in sales and marketing of each other’s products and the co-operation shall be enhanced even further in the coming years. In addition, the deal sets the right value for our pulp asset. This transaction is also one of the biggest foreign investments in Finland during the past decade,” says Kari Jordan, President and CEO of Metsä Group.
The transaction is subject to the approvals by the German competition authorities. The transaction is expected to be closed during the second quarter of 2012.
Itochu is one of the largest trading companies in Japan with approximately 130 bases in different industries in close to 70 countries. Itochu’s trading volume for the fiscal year ended on 31 March 2011 exceeded EUR 100 billion. Further information of the company can be found on www.itochu.co.jp/en/.
When completed, the transaction is estimated to improve Metsä Group’s equity ratio by at least 4 percentage points, depending on the use of the proceeds. The estimated improvement in the net gearing ratio is 30 percentage points.
Press conference at 9.00 am
Metsä Group will arrange a press conference today, 11 April at 9.00 am at conference center Bank’s Wall Street, Unioninkatu 22, Helsinki. In the event, President and CEO Kari Jordan will present the transaction made with Itochu Corporation. Please sign up by contacting Terhi Kylänlahti at Group Communications, tel. +358 10 465 4202.
Metsä Group
Group Communications
For further information, please contact:
Esa Kaikkonen, Executive Vice President and General Counsel, tel. +358 10 465 4749
Reeta Kaukiainen, Senior Vice President, Communications, tel. +358 50 522 0924
Metsä Group is a responsible forest industry group whose products are part of people’s everyday life and promote sustainable well-being. Metsä Group produces high-quality products mainly from renewable Nordic wood. The Group’s core businesses areas are tissue and cooking papers, board and paper, pulp, wood products as well as wood supply. Metsä Group’s sales totalled EUR 5.3 billion in 2011, and it employs approximately 12,500 people. The Group operates in some 30 countries.