SOLIDIUM SUPPORTS THE COMBINATION OF RAUTARUUKKI AND SSAB INTO A SINGIFICANT NORDIC STEEL COMPANY WITH FOCUS ON SPECIAL STEELS
Solidium supports the transaction announced today by Rautaruukki Oyj and SSAB
AB, whereby the companies intend to combine into a significant Nordic carbon
steel company with production also in North America and a strong foothold in
special steels globally. The combination will expedite the execution of the
special steels focused strategies of Rautaruukki and SSAB and enable the
achievement of significant synergies, expected to amount to up to EUR 150
Â "The combination of Rautaruukki and SSAB has been contemplated several times
during the last few decades. Right now there is particularly strong strategic
and financial reasoning for the transaction. As the European carbon steel market
is suffering from substantial overcapacity, small producers, such as Rautaruukki
and SSAB, can be competitive by focusing their production into high-quality
steel products. The combination offers Rautaruukki a possibility to faster
execute its special steels based strategy and to participate in the formation of
a globally significant special steel producer" comments Kari JÃ¤rvinen, the
Managing Director of Solidium.
The profitability of steel producers is negatively impacted by the structural
decline in the carbon steel demand in Europe and the high price levels of raw
materials. Tight cost control and the ability to flexibly react to changes in
the demand are crucial for steel producers due to the market situation.
Rautaruukki and SSAB have together prepared an industrial plan, which seeks to
improve the competitiveness and flexibility of the production set-up, and
enables the application of best practices in the production units of the
combined entity. The transaction diminishes Rautaruukki's dependency of the
European steel demand by increased share of special steels with global markets
and the North American presence of the group.
"As an owner, Solidium has been supporting Rautaruukki's Board and management in
the discussions concerning the transaction. This transaction creates a stronger
Nordic steel company in which Rautaruukki's significant product development and
knowhow base have a central role", Kari JÃ¤rvinen states.
"Our view is that the transaction is beneficial to Rautaruukki's shareholders,
personnel and customers. As a result of the substantial synergy benefits, there
is a clear financial rationale behind the transaction. The shareholders of
Rautaruukki receive a significant part of these synergy benefits through the
beneficial exchange ratio", JÃ¤rvinen continues.
The combination is implemented through a share exchange offer by SSAB to all
Rautaruukki's shareholders. Solidium has given its commitment to accept the
share exchange offer and to support the execution of the combination. Solidium
will become the largest owner of the combined company in terms of the number of
shares and the second largest in terms of the votes (holding 16.8 percent of
total shares and 10.0 percent of total votes assuming that all Rautaruukki's
shareholders accept the share exchange offer). The exchange ratio offers a
premium of 20 percent for Rautaruukki's shareholders compared with the last
closing price of Rautaruukki shares preceding the announcement and a premium of
25 percent compared with the volume weighted average price of Rautaruukki shares
during the three months preceding the announcement.
AB IndustrivÃ¤rden, the main shareholder of SSAB, has declared its intention in
SSAB's nomination committee to support the election of two Board members as
proposed by Solidium to the Board of Directors of the combined entity during two
years following the completion of the transaction. Solidium intends to propose
to the SSAB's nomination committee the election of Kim Gran, the Chairman of
Rautaruukki's Board of Directors, and Matti Lievonen, the Vice Chairman of
Rautaruukki's Board of Directors, into SSAB's Board of Directors in the
Extraordinary General Meeting held immediately following the completion of the
transaction. Respectively, Solidium has declared its intention in SSAB's
nomination committee to support the election of the Chairman of the Board and
two Board members as proposed by IndustrivÃ¤rden during two years following the
completion of the transaction.
Further information: Managing director, Kari JÃ¤rvinen, Solidium Oy, tel.
+358 40 548 3995.
Solidium is a limited company wholly owned by the State of Finland. Its mission
is to strengthen and stabilise Finnish ownership in nationally important
companies and increase the value of its holdings in the long run. Investment
activities are based on financial analysis. The core of Solidium's investment
strategy is engagement and value enhancing management of its current holdings.
Through its stakes, Solidium is a minority owner in twelve listed companies:
Elisa, Kemira, Metso, Outokumpu, Outotec, Rautaruukki, Sampo, Stora Enso,
Talvivaara Mining Company, TeliaSonera, Tieto and Valmet. The market value of
Solidium's investments is approximately EUR 8.2 billion at the date of this
press release. Further information: www.solidium.fi.
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Source: Solidium Oy via GlobeNewswire