Valmet Corporation and Metso Corporation have signed an agreement on the sale of Metso’s Process Automation Systems business to Valmet on January 15, 2015. The enterprise value of the acquisition is EUR 340 million. The acquisition will be financed with committed long-term financing. It is estimated that the acquisition will be completed by April 1, 2015. The completion of the transaction is subject to approval by the competition authorities.
The acquired operations supply process automation and information management systems and related applications and services to the pulp, paper, energy and other process industries. The purchased operations employ about 1,600 people. Net sales for 2013 amounted to approximately EUR 300 million.
Combination of Valmet and Process Automation Systems creates unique customer offering
As a result of the acquisition, Valmet will become a stronger and unique technology and services company in its field, with a full automation offering. The acquisition strengthens Valmet’s competitiveness by combining paper, pulp and power plant technology offering, services, process know-how and automation into one customer value-adding entity. Approximately 80 percent of Process Automation Systems sales comes from Valmet’s current customer industries and the rest from other process industry clients.
Process Automation Systems is a strong, established business
The business being acquired is a strong business, with established customer relations and a high level of technology and know-how. About 1,600 automation professionals work close to customers at approximately 80 locations around the world. The share of services business in the acquired business is significant, accounting for approximately 45 percent of net sales in 2013, and is based on large installed automation base and a captive business model. The acquired business has a good financial track record and stable cash flow.
The acquisition makes Valmet more stable and more profitable
Net sales of the Process Automation Systems business is approximately EUR 300 million, of which Valmet has accounted for approximately 10 percent. Therefore the acquisition increases the share of stable high-margin business of Valmet’s net sales by approximately EUR 270 million.
Process Automation Systems has a solid financial track record, with slight growth and relatively stable margins during the last 10 years. EBITA margin (earnings before interest, taxes and amortization) for Process Automation Systems has been approximately 10-12 percent.
Through the acquisition, Valmet strengthens its offering and continues to develop its business. Significant cost synergies are not expected to be achieved.
Valmet’s balance sheet remains strong also after the acquisition. To illustrate, if the acquisition had taken place at the end of September 2014, Valmet’s gearing after the acquisition would have been be approximately 23 percent and equity ratio approximately 35 percent, based on illustrative figures of the acquired business at the end of September 2014.
Pasi Laine, President and CEO of Valmet Corporation: With the acquisition we create a unique customer offering and strengthen further our leading market position
“Through the acquisition of Process Automation Systems, Valmet will become a technology and service company with full automation offering. The acquisition will help Valmet in increasing its business stability, while also improving profitability. By combining paper, pulp and energy technology, process know-how, services and automation, we can serve our customers even better than before and move our customers’ performance forward. This transaction has an excellent fit with our existing strategy and the timing is right for Valmet,” says Pasi Laine, President and CEO of Valmet Corporation.
News conference for analysts, investors and media
Valmet will arrange a news conference in English for investment analysts, investors, and media on January 15, 2015 at 1:00 p.m. Finnish time (EET). The news conference will be held at Valmet’s head office, Keilasatama 5, 02151 Espoo, Finland. The conference can also be followed through a live webcast at www.valmet.com/webcasts.
It is also possible to take part in the news conference through a conference call. Conference call participants are requested to dial in at least ten minutes prior to the start of the conference, at 12:50 p.m. (EET), at +44 1452 560304. The participants will be asked to provide the following conference ID: 67179921.
During the webcast and conference call, all questions should be presented in English. After the webcast and conference call, media has a possibility to interview the management in Finnish.
In the picture: Pasi Laine, President and CEO of Valmet Corporation.