Valmet sustains its goal to merge Valmet and Neles

Valmet sustains its goal to merge Valmet and Neles

Valmet announced on September 29, 2020 that it has approached the Board of Directors of Neles with a proposal to start discussions on a potential statutory merger between the two companies. The Board of Directors of Neles has this morning announced a negative response to Valmet’s proposal.

After sending the first discussion proposal, Valmet has, based on the request of the Board of Directors of Neles, further clarified its view on the strategic rationale of the combination, the potential structure of the transaction including a potential amount of capital return to the shareholders supporting an efficient balance sheet while allowing future investments, and the synergy potential.

Valmet has also made a proposal on the timetable and emphasized its willingness to engage into discussions with an open dialogue and trust to clarify a more specific merger proposal including a share exchange ratio. Unfortunately, Valmet was not invited to discuss these topics in more detail with Neles.

Valmet has also raised its concern with the Board of Directors of Neles regarding Alfa Laval possibly waiving its acceptance condition, according to which the amount of tendered shares should be over two thirds (2/3) of the issued and outstanding shares and votes of Neles, and potentially completing its tender offer on a lower acceptance level. This would in Valmet’s view be contrary to the interest of Neles and all its shareholders. To Valmet’s understanding, this scenario has not been addressed in the recommendation of the Board of Directors of Neles dated August 12, 2020.

As announced earlier, in Valmet’s view the combination of Valmet and Neles would create excellent long-term value to the shareholders of both companies. It would form a strong platform for further business growth especially in automation systems and valves. Furthermore, the combination would be an exciting opportunity for Neles’ and Valmet’s employees, as well as customers of both companies who would benefit from the strength of the combined entity and offering. The combination would create a Nordic based global leader with 16,000 employees, over EUR 4 billion in net sales, and leading market positions in its respective segments.

For these reasons Valmet sustains its goal to merge Valmet and Neles, with a strong view on the excellent long-term value potential to the shareholders of both companies, the industrial logic and synergy potential. With a 29.5% shareholding in Neles and with a solid underlying thinking on the long-term shareholder value creation potential, Valmet’s proposal is carefully considered. The negative response from the Board of Directors of Neles effectively deprives its shareholders of the possibility to evaluate an alternative to Alfa Laval’s offer.

Consequently, as a major shareholder of Neles, Valmet does not support the recommendation of the Board of Directors of Neles to accept Alfa Laval’s tender offer for all the shares and votes of Neles.

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