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.
-- 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
-- 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
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
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 presence
Following 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
The 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 team
At 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.
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.
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
Signing of share purchase agreement (SPA): July 10, 2017
Publication of Information Memorandum: Within 30 working days after
signing of SPA
Competition approvals required for closing: Brazil, Canada, China, EU,
Close of transaction: Expected in second half 2017
Financing 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
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.
Contact Stian Hasle
Cellular +47 97736022
Contact Erik Brynhildsbakken
Cellular +47 41751271
Certain 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"
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 materially
from 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.
Hydro acquires Sapa: http://hugin.info/106/R/2119234/807073.pdf
This announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the information
Source: Norsk Hydro via Globenewswire
(END) Dow Jones Newswires
July 10, 2017 01:15 ET (05:15 GMT)