Norsk Hydro has agreed with Orkla to acquire its 50 percent
interest in Sapa for a total enterprise value of NOK 27 billion,
giving full ownership in the global leader in extruded aluminium
solutions and making Hydro a leading force in the global aluminium
industry.
Transactional highlights
- Binding agreement to acquire Orkla's 50% interest in Sapa
- Sapa enterprise value NOK 27 billion
- Accretive to earnings and strong cash generation from Sapa from
day 1
- Synergies of NOK 200 million per year, mainly related to remelt
and recycling
- Sapa to become new business area in Hydro, named Extruded
Solutions
- Anticipated closing of the transaction in second half 2017
- Strong strategic rationale
- Global leadership: worldwide production and customer offering,
with unparalleled technological capability
- Growth: capability and freedom to grow in the most attractive
areas of global aluminium
- Infinite solutions: responsible operations and sustainable
solutions for the future low-carbon economy
"Hydro is now confirming its position as the world's leading
integrated aluminium company and the transaction reinforces our
strategic direction Better, Bigger and Greener, with a solid asset
base, unique competencies and capabilities from mining to end-user
products," said Svein Richard Brandtzæg, President and CEO in
Hydro. "Sapa will enable us to assume global leadership, establish
a platform for growth, and provide responsible operations and
sustainable solutions for the future low-carbon economy."
The combination will make Hydro the only global company in the
aluminium industry that is fully integrated across the value chain
and markets. Hydro will have unparalleled strength in technology,
R&D, innovation and product development, as well as an
unmatched product and service offering to the benefit of more than
30,000 customers throughout the world.
After Hydro and Orkla combined their aluminium extrusion assets
in 2013, the two companies have consistently supported the Sapa
joint venture's impressive progress towards higher performance and
value creation through streamlining and improving its global
operations.
Global reach, local presenceFollowing the transaction,
Hydro will become a global, integrated aluminium company with more
than 35,000 employees, and activities in around 40 countries.
Hydro's rolled products business has a strong market presence
throughout product segments in Europe. Sapa is the global extrusion
champion, with strong market shares in North America and Europe,
and is the global leader in precision tubing.
Hydro also has solid market presence in metal products across
the value-added metal product categories in Europe, North-America
and Asia, and is Norway's second-largest producer of renewable
hydropower. With long positions in bauxite and alumina, Hydro is
among the global leaders in the third-party bauxite and alumina
market outside China.
"Sapa has successfully restructured its business and lifted
profitability and is now well-positioned to continue its journey as
part of Hydro, aiming for even higher value creation through
targeting high-tech, high-competence value-add market segments,"
Brandtzæg said.TransactionThe transaction will be financed
through cash positions and issuance of bonds in Norwegian and
international markets, and will be temporarily funded by committed
undrawn credit lines. Following the transaction, Hydro is committed
to retain its investment grade rating and a robust balance sheet.
Hydro will maintain its dividend policy of returning 40 percent of
net income over the cycle, with NOK 1.25 per share seen as a floor
in 2017.
The purchase price will be paid in cash at completion, adjusted
for net debt and normalized working capital.
Completion of the transaction is subject to approval from
relevant competition authorities, and is expected in the second
half of 2017.
Description of acquired assets Formed as a 50/50 joint
venture between Orkla and Hydro in 2013, Sapa is a highly
successful aluminium solutions provider and the world's largest
extrusion company. Sapa operates within the business areas
Extrusion Europe, Extrusion North America, Precision Tubing and
Building Systems, has 22,400 employees and is present in 40
countries.
Key financial figures for Sapa (100 % basis) (unaudited) In NOK
million, except sales volumes
|
Q1
2017 |
Q1
2016 |
Year
2016 |
Year
2015 |
Year
2014 |
Sales volume (1000
mt) |
355 |
349 |
1,365 |
1,363 |
1,399 |
Total Revenues |
14,337 |
13,919 |
53,430 |
55,397 |
46,377 |
Reported EBIT |
856 |
655 |
2,420 |
528 |
-317 |
Reported net income
(loss) |
625 |
418 |
1,779 |
246 |
-626 |
|
|
|
|
|
|
Underlying EBITDA |
1,100 |
901 |
3,498 |
2,729 |
1,916 |
Underlying EBIT |
778 |
571 |
2,197 |
1,407 |
652 |
Underlying net income
(loss) |
562 |
365 |
1,553 |
907 |
398 |
|
|
|
|
|
|
Total assets |
28,628 |
28,204 |
25,939 |
28,870 |
27,629 |
Total equity |
14,567 |
12,828 |
13,800 |
12,871 |
11,538 |
Total liabilities |
14,060 |
15,376 |
12,139 |
15,999 |
16,091 |
Sapa Board of Directors and management teamAt the date of this
announcement, Sapa's Board of Directors consists of six persons.
The Board of Directors is presented in the table below. After the
completion of the transaction, Hydro will own 100% of Sapa and will
as a consequence change the board composition of the company.
Name |
Position |
Peter A. Ruzicka |
Chairman of the
Board |
Eivind Kallevik |
Board member |
Anne-Lene Midsheim |
Board member |
Terje Andersen |
Board member |
Kenneth Hertz |
Board member |
Tor Egil Skulstad |
Board member |
At the date of this announcement, Sapa's management team
consists of 10 individuals. The management team is presented in the
table below.
Name |
Position |
Egil Hogna |
President &
CEO |
Karl Eichinger |
EVP & CFO |
Katarina Nilsson |
EVP HR &
Organization |
Florian Krumbacher |
EVP & General
Counsel |
Rafael Fuertes |
EVP Strategy &
Innovation |
Erika Ahlqvist |
EVP Communication &
CSR |
Charlie Straface |
EVP & Business Area
President - Extrusion North America |
Sergio Vendrasco |
EVP & Business Area
President - Precision Tubing |
John Thuestad |
EVP & Business Area
President - Extrusion Europe |
Salvador Biosca |
EVP & Business Area
President - Building Systems |
There are customary retention agreements in place for Sapa's
management team. The total cost of the retention arrangements is
estimated to approximately NOK 20 million. Orkla and Hydro have
agreed to share the retention costs.
Indicative timeline Signing of share purchase agreement
(SPA): July 10, 2017Publication of Information Memorandum: Within
30 working days after signing of SPACompetition approvals required
for closing: Brazil, Canada, China, EU, TurkeyClose of transaction:
Expected in second half 2017Financing activities: Second half
2017/2018
Press conference, analyst and investor presentation and
conference call July 10, 09:00 CET: Press conference and
analyst and investor presentation with webcast (in English) at
Hydro' Oslo headquarters. Link to webcast will be made available on
www.hydro.com.
July 10, 15:00 CET: Telephone conference for the international
financial market. Phone-in details will be made available on
www.hydro.com.
Financial and legal advisors Morgan Stanley has provided
Hydro's Board of Directors with a fairness opinion for the
transaction, while Wikborg Rein acted as Hydro's primary legal
advisor.------------------------------------------------------------
Hydro is a global aluminium company with production, sales and
trading activities throughout the value chain, from bauxite,
alumina and energy generation to the production of primary
aluminium and rolled products as well as recycling. Based in
Norway, the company has 13,000 employees involved in activities in
more than 40 countries on all continents. Rooted in more than a
century of experience in renewable energy production, technology
development and progressive partnerships, Hydro is committed to
strengthening the viability of the customers and communities we
serve.
Investor contactContact Stian HasleCellular +47 97736022E-mail
Stian.Hasle@hydro.com
Press contactContact Erik BrynhildsbakkenCellular +47
41751271E-mail Erik.Brynhildsbakken@hydro.com
Cautionary noteCertain statements included in this announcement
contain forward-looking information, including, without limitation,
information relating to (a) forecasts, projections and estimates,
(b) statements of Hydro management concerning plans, objectives and
strategies, such as planned expansions, investments, divestments,
curtailments or other projects, (c) targeted production volumes and
costs, capacities or rates, start-up costs, cost reductions and
profit objectives, (d) various expectations about future
developments in Hydro's markets, particularly prices, supply and
demand and competition, (e) results of operations, (f) margins, (g)
growth rates, (h) risk management, and (i) qualified statements
such as "expected", "scheduled", "targeted", "planned", "proposed",
"intended" or similar.
Although we believe that the expectations reflected in such
forward-looking statements are reasonable, these forward-looking
statements are based on a number of assumptions and forecasts that,
by their nature, involve risk and uncertainty. Various factors
could cause our actual results to differ materiallyfrom those
projected in a forward-looking statement or affect the extent to
which a particular projection is realized. Factors that could cause
these differences include, but are not limited to: our continued
ability to reposition and restructure our upstream and downstream
businesses; changes in availability and cost of energy and raw
materials; global supply and demand for aluminium and aluminium
products; world economic growth, including rates of inflation and
industrial production; changes in the relative value of currencies
and the value of commodity contracts; trends in Hydro's key markets
and competition; and legislative, regulatory and political
factors.
No assurance can be given that such expectations will prove to
have been correct. Hydro disclaims any obligation to update
or revise any forward-looking statements, whether as a result of
new information, future events or otherwise.
This information is subject to the disclosure requirements
pursuant to section 5-12 of the Norwegian Securities Trading
Act.
Attachments:
http://www.globenewswire.com/NewsRoom/AttachmentNg/7809c49a-2966-4ba4-82ee-eb0fe29a8e7a
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