Norsk Hydro AS Norsk Hydro: Hydro Acquires Sapa -2-


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


-- 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


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.

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, 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

July 10, 15:00 CET: Telephone conference for the international financial

market. Phone-in details will be made available on

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 contact

Contact Stian Hasle

Cellular +47 97736022


Press contact

Contact Erik Brynhildsbakken

Cellular +47 41751271


Cautionary note

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"

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 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:

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

contained therein.

Source: Norsk Hydro via Globenewswire

(END) Dow Jones Newswires

July 10, 2017 01:15 ET (05:15 GMT)