Combination of Metso Minerals and Outotec – Metso Flow Control to become independent company

Metso
July 09, 2019
By Metso
July 9, 2019 - Metso and Outotec have agreed to combine Metso Minerals and Outotec to create a leading company in process technology, equipment and services serving the minerals, metals and aggregates industries.

The Combined Company, comprising Metso Minerals and Outotec (but excluding Metso Flow Control), will be named “Metso Outotec”. It had illustrative combined sales of €3.9 billion in 2018 (approximately €4.2 billion including the impact of the recently announced acquisition of McCloskey by Metso).

Metso Flow Control will be a pure-play listed entity under the name of Neles with 2018 sales of €593 million.

“Today is an exciting day as we announce the transformational combination of two great companies and simultaneously create an independent leader in flow control,” said Metso Chairman, Mikael Lilius. “The combination of Metso and Outotec is a unique opportunity to deliver significant value for our shareholders with a broad presence across minerals, metals and aggregates value chains and an even stronger platform for growth and innovation.”

The combination of Metso Minerals and Outotec will create a unique company in the industry. Metso Outotec will leverage the strengths of both companies, including technology and R&D, product and process excellence, scale and global service offering footprint. The combination will deliver significant benefits to all stakeholders.

Metso Minerals and Outotec expect to achieve run-rate annual pre-tax cost synergies of at least €100 million, and run-rate annual revenue synergies of at least €150 million, delivering significant value for shareholders.

“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,” said Outotec Chairman, Matti Alahuhta. “Metso Outotec’s global operating network, scale, wide technology and service offerings and sustainable development principles will unlock significant benefits for all stakeholders. 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.”

The recently announced acquisition of McCloskey is expected to complement the business profile of Metso Outotec, expanding and strengthening the aggregates business. Metso Outotec will benefit from strong free cash flow and a solid capital structure and will aim for an investment grade credit rating in line with the current Metso rating.

The dividend policy for Metso Outotec will be determined by the board of Metso Outotec following completion of the transaction. However, Metso Outotec is expected to have the capacity for an attractive dividend policy, consistent with Metso’s current dividend policy, while maintaining a strong balance sheet.

The combination will 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 shares in Outotec to be delivered to Metso shareholders. Outotec shareholders will continue to own their shares in Outotec.

Upon completion, Metso shareholders will receive 4.3 newly-issued shares in Outotec for each share owned in Metso on the record date. This implies Metso shareholders would own approximately 78.0 per cent of the shares and votes of Metso Outotec, and Outotec shareholders would own approximately 22.0 per cent of the shares and votes of Metso Outotec. In addition, Metso shareholders will retain their current shares in Metso, which will be renamed Neles.

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