Skip to main content

Metso Minerals to merge with Outotec

Published by
Global Mining Review,


Metso Corporation (Metso) and Outotec Oyj (Outotec) have unanimously approved a demerger plan and a combination agreement to combine Metso’s minerals business (Metso Minerals) with Outotec.

The combined company, Metso Outotec Corporation (Metso Outotec or the combined company), had illustrative 2018 combined sales and Adjusted EBITA of €3.9 billion and €369 million (excluding the impact of the €110 million provision recorded in relation to the ilmenite smelter project as described in Outotec’s 2018 financial statements). This represents an illustrative combined Adjusted EBITA margin of 9.6% in 2018, excluding the benefit of the synergies described elsewhere in this stock exchange release, and also Metso’s recently announced acquisition of McCloskey International (McCloskey). Including McCloskey, illustrative 2018 combined sales would have been approximately €4.2 billion.

Metso shareholders will receive as demerger consideration 4.3 new shares in Outotec for each share owned in Metso. Upon completion of the transaction, Metso and Outotec shareholders would own approximately 78.0% and approximately 22.0%, respectively, of the shares and votes of Metso Outotec.

In addition, Metso shareholders will retain their current shares in Metso, which will be renamed Neles.

Metso shareholders will receive the previously declared dividend of €0.60 per share, which is payable in November 2019. In addition, the board of Metso may propose a dividend of up to €221 million in aggregate to be payable in 2020 before closing of the transaction.

The board of Outotec may propose a dividend of up to €20 million in aggregate to be payable in 2020 before closing of the transaction.

Upon completion, Metso will be renamed Neles Corporation (Neles) and will be a separately listed entity focused on flow control, independent from Metso Outotec and 100% owned by Metso shareholders.

Both Metso Outotec and Neles will continue to be listed on Nasdaq Helsinki.

Benefits of the combination of Metso Minerals and Outotec

The highly complementary combination of Metso Minerals and Outotec is expected to deliver a range of strategic, commercial, operational and financial benefits:

  •        A leading company with a wide presence across the value chain allowing Metso Outotec to provide an end-to-end offering in             minerals processing.
  •        Enlarged installed base coupled with advanced service offering providing opportunities to unlock significant benefits.
  •        Leadership in sustainable technology across all businesses.
  •        Breadth across verticals (minerals / metals / aggregates), geography and application provide enhanced performance.
  •        Significant revenue and cost synergies.
  •        Solid capital structure and attractive dividend policy.

Strategic, commercial and operational benefits

The combination of Metso Minerals and Outotec will create a leading company in process technology, equipment and services serving the minerals, metals and aggregates industries. Metso Outotec will also have expertise in specialist areas, such as recycling and energy solutions.

The combination of Metso Minerals and Outotec is highly complementary and 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 Outotec will have a presence across the full minerals processing and metals refining value chain, with a differentiated ability to deliver end-to-end solutions across the whole process from crushing to end products. The combined company will own a broad portfolio of leading technologies in, for example, comminution, beneficiation and metals refining, as well as a market leading aggregates business and global strength in services.

The enhanced scale and combination of technological and service expertise will enable the combined company to offer more integrated customer solutions and supply larger process solutions to existing and new customers.

Metso Outotec will offer enhanced customer support through a stronger global operating network and customer proximity, as well as access to a wide range of services and consumables.

Metso Outotec will have a strong technology platform, and will have critical scale to continue to drive technology innovation and provide customers with differentiated service offerings. The combined company will benefit from extensive patents and patent applications, R&D specialists globally and in-house R&D centres across the enlarged platform. The combined capabilities will further accelerate development of intelligent minerals processing and data analytics, and leverage technical know-how and IP across the enlarged product portfolio to deliver sustainable differentiated client solutions and further develop market leading digital platforms.

Metso Outotec will benefit from a presence across a large number of geographic markets and from its knowledge across a broad range of mineral applications (including copper and a range of high growth minerals that are used in the battery technology industry). In addition, the Combined Company will benefit from the counter-cyclical aggregates business, reinforced by the recently announced acquisition of McCloskey by Metso. The composition of the portfolio of the combined company should enhance Metso Outotec’s performance through the cycle.

Metso and Outotec share common cultural values, including strong commitments to sustainable development. The combination will allow Metso and Outotec to join forces in the development of solutions for customers to meet their sustainability goals. In addition, significant investments will continue to be made in the areas of safe working environment, responsible procurement and environmental efficiency of operations.

Financial benefits: significant revenue and cost synergies

Metso and Outotec expect to achieve run-rate annual pre-tax cost synergies of at least €100 million. In addition, the highly complementary product and service portfolio and the combined global footprint are expected to generate multiple cross-selling opportunities, leading to run-rate annual revenue synergies of at least €150 million.

 

The cost synergies are expected to be realised from operations (which are expected to contribute approximately 60% of the expected annual pre-tax cost synergies of €100 million), with the balance from optimisation of supply chain and procurement savings.

Both cost and revenue synergies are anticipated to be fully realised by the end of the third year following completion of the transaction, phased in over that period. It is expected that the realisation of these synergies would result in one-off pre-tax costs of approximately €100 million, with the substantial majority of this cost being incurred during the first 12 - 24 months post completion.

Metso Chairman, Mikael Lilius, said: “Today is an exciting day as we announce the transformational combination of two great companies and simultaneously create an independent leader in flow control. 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. Metso Outotec brings together a long history of technological leadership, customer focus and excellence in project execution. Metso Outotec will be further supported by the realisation of the significant synergies potential in the combination. We look forward to working together with Outotec and its employees to develop an industry leader with attractive opportunities.”

Read the article online at: https://www.globalminingreview.com/mining/05072019/metso-minerals-to-merge-with-outotec/

You might also like

 
 

Embed article link: (copy the HTML code below):