OUTOKUMPU TO SELL ITS FABRICATED COPPER PRODUCTS BUSINESS TO NORDIC CAPITAL
OUTOKUMPU OYJ STOCK EXCHANGE RELEASE APRIL 5, 2005 AT 10.00 AM
OUTOKUMPU TO SELL ITS FABRICATED COPPER PRODUCTS BUSINESS TO NORDIC
CAPITAL
Outokumpu and Nordic Capital have today signed a sales and purchase
agreement whereby Outokumpu will sell its fabricated copper products
business (Outokumpu Copper Products Oy), excluding the Tube and
Brass division, to the private equity firm Nordic Capital. The total
consideration of the transaction is EUR 599 million. Outokumpu will
recognize a capital loss of EUR 220 million on the transaction and
at the same time an impairment loss of EUR 85 on the remaining Tube
and Brass division. In spite of these one-time losses, Outokumpus
gearing will decrease by some 9 percentage points as a result of the
transaction. Closing of the transaction is expected to take place in
June this year at the latest.
Juha Rantanen, CEO of Outokumpu comments: "The sale of the fabricated
copper products business is a strategic move on our way to a focused
stainless steel and technology company. Im very pleased that we
have today reached an agreement with Nordic Capital. Our vision is
to be the undisputed number one in stainless and with the divestment
we will make a significant step towards reaching our desired
business structure. The proceeds from the divestment will
considerably strengthen our capital structure and make us more
flexible in continuing on our chosen path. At the same time, I am
convinced that the sold business will have a far better growth
potential with its new owner."
Since outlining its strategic direction to focus on leadership in
stainless steel last August, Outokumpu has studied various
alternatives to exit from its fabricated copper products business.
During the process, it became obvious that the sale of the business
as a whole was clearly the preferred alternative. The divestment
will now enable Outokumpu to put all its managerial and financial
resources into the development of the stainless steel business and
support the reaching of its ultimate goal to secure a significant
and sustained increase in shareholder value.
The scope of the transaction comprises the following divisions and
businesses of the Outokumpu Copper business area:
- Americas
- Europe
- Automotive Heat Exchangers
- Appliance Heat Exchanger & Asia
- the Forming equipment businesses
The 2004 sales of the sold businesses were some EUR 1.7 billion and
the number of personnel was 6 400 at the end of the year. The
personnel will continue under existing employment terms and
conditions under Nordic Capital. It has also been agreed by the
parties that the sold businesses will continue to use the name
Outokumpu Copper Products Oy during a transition period of up to 12
months after closing.
The total consideration of the transaction is EUR 599 million, which
comprises a cash component of EUR 389 million, a USD-denominated
long-term subordinated vendor note of EUR 100 million as well as
transfer of debt and pension liabilities with a net worth of EUR 109
million. In order to be able to transfer 100% of the Joint Venture
Outokumpu Heatcraft in connection with the transaction, Outokumpu
has agreed to buy out the 45% minority shareholder Lennox
International.
Outokumpu will recognize a capital loss of EUR 220 million from the
disposal. Furthermore, the management has decided to recognize an
additional EUR 85 million non-cash impairment loss on the remaining
Tube and Brass division based on the managements updated valuation
of the business. These losses will be recorded in the first quarter
2005 results. Outokumpu will de-consolidate the assets sold to
Nordic Capital at the end of the first quarter 2005 but consolidate
their results until the end of the first quarter 2005.
In spite of these one-time losses, Outokumpus gearing will decrease
by some 9 percentage points due to a substantial reduction of the
Groups net debt and take gearing closer to the target level of 75%.
The closing of the transaction is subject to usual regulatory
clearances and other conditions, and is expected to take place in
June this year at the latest.
The current President of Outokumpu Copper, Kalevi Nikkilä, whos
retirement was announced earlier, will continue to be in charge of
the businesses within the scope of the transaction until closing.
Bo Söderberg, Partner at Nordic capital, comments the transaction:
"As an independent company we see good prospects for Outokumpu Copper
Products to develop and grow going forward. Outokumpu Copper
Products has good long-term customer relationships and great
opportunities for growth, not least in the Asian markets and through
new solutions of copper use that are being developed for future
applications, including new markets created by stricter
environmental standards. The company is recognized for high quality
and application engineering expertise. We look forward to working
closely with the management team to further develop and expand the
business from both a Nordic and a global perspective."
The Tube and Brass division of Outokumpu Copper is not in the scope
of the transaction, as some of its units were acquired in connection
with the Boliden transaction at the end of 2003 and the integration
and restructuring process is ongoing. To bring the Tube and Brass
division back to profits will take some time, and it is Outokumpus
intention to divest these businesses at a later date. In 2004, the
Tube and Brass division generated sales of some EUR 460 million and
it has 1 450 employees. As of April 1, 2005 the Tube and Brass
division will report to Deputy CEO Karri Kaitue, as one of Outokumpu
Groups portfolio businesses.
For further information, please contact:
Karri Kaitue, Deputy CEO, Outokumpu Oyj,
tel. +358 9 421 5506
Eero Mustala, SVP Corporate Communications, Outokumpu Oyj,
tel. +358 9 421 2435
Bo Söderberg, Partner, Nordic Capital,
tel. +46 8 440 50 50
Outokumpu Oyj
Corporate Management
Eero Mustala
Nordic Capital is a leading private equity firm focusing on
investments primarily in the Nordic middle-market arena. The firm
has a strong investment track record, an extensive network of
contacts and firsthand knowledge of local industries and business
practices. Since its inception in 1989, Nordic Capital has invested
in more than 60 Nordic based companies operating in a range of
segments and sectors. Nordic Capitals proven investment strategy
creates value by actively implementing key value drivers such as new
industrial combinations, strategic repositioning and
internationalization. A range of leading Nordic and international
institutions are investors in Nordic Capital funds.
www.nordiccapital.com.
Outokumpu is an international stainless steel and technology
company. Its vision is to be the undisputed number one in stainless,
with success based on operational excellence. Customers in a wide
range of industries from the process industry and industrial
machinery to building, construction and electrical industry,
transportation, electronics and information technology, as well as
catering and households use Outokumpus metal products,
technologies and services worldwide. Outokumpu is dedicated to
helping its customers gain competitive advantage.
Outokumpu operates in some 40 countries and employs 19 500 people.
Annual sales exceed EUR 7 billion, of which 95% is generated outside
Finland. The Groups headquarters is located in Espoo, Finland. The
parent company, Outokumpu Oyj, has been listed on the Helsinki stock
exchange since 1988. www.outokumpu.com.
