This stock exchange release may not be published or distributed, in whole or in
part, directly or indirectly, in the United States of America, Australia,
Canada, Hong Kong, Japan, New Zealand, South Africa or any other country where
such publication or distribution would violate applicable laws or rules or would
require additional documents to be completed or registered or require any
measure to be undertaken, in addition to the requirements under Finnish and
Swedish law. For further information, please see “Important notice” in this
stock exchange release.
The Boards of Directors of SSAB AB (publ) (”SSAB”) and Rautaruukki Oyj
(”Rautaruukki” or “Ruukki”) today announce a plan to combine the two companies
through SSAB making a recommended public share exchange offer to Rautaruukki’s
shareholders with a premium of 20% based on the last three-month volume-weighted
average share prices of both SSAB and Rautaruukki. AB Industrivärden
(“Industrivärden”) intends to continue to act as the lead active shareholder in
supporting the company’s future development. The combined company will be a
Nordic and U.S.-based steel company with a global reach and cost-efficient and
flexible production. The proposed combination is expected to create substantial
value for the shareholders in the combined company through the realization of
annual cost synergies of up to SEK 1.4 billion (EUR 150 million).[1] The
combined company will continue to serve customers with a broad offering within
high strength steels, standard strip and plate products as well as tubular
products.
The share exchange offer
· For each Rautaruukki share, 0.4752 newly issued SSAB class A shares and
1.2131 newly issued class B shares are being offered.[2] The total value of the
share exchange offer amounts to SEK 10.1 billion (EUR 1.1 billion).
· Based on the three-month volume-weighted average share prices of both SSAB
and Rautaruukki, the share exchange offer corresponds to a premium of 20% for
Rautaruukki shareholders.[3] Based on the closing prices of the Rautaruukki and
SSAB shares on January 21, 2014, the share exchange offer corresponds to a
premium of 20% for Rautaruukki shareholders.[4]
· As of December 31, 2013, SSAB had 323.9 million shares outstanding,
consisting of 240.8 million class A shares (74% of outstanding shares) and 83.2
million class B shares (26% of outstanding shares). In total, SSAB offers 66.1
million class A shares (28% of total shares offered) and 168.6 million class B
shares (72% of total shares offered) to Rautaruukki’s shareholders. For the
combined company, the total outstanding shares will be 558.6 million, consisting
of 306.8 million class A shares (55% of outstanding shares) and 251.8 million
class B shares (45% of outstanding shares). Each class A share entitles the
holder to one vote and each class B share entitles the holder to one-tenth of
one vote. There are no other differences between the SSAB share classes.
· Pro-forma ownership of the combined company will be 58% of the capital and
75% of the votes for current SSAB shareholders and 42% of the capital and 25% of
the votes for current Rautaruukki shareholders, assuming full acceptance of the
share exchange offer.
· SSAB and Rautaruukki will propose to their respective AGM´s not to pay
dividends for the financial year 2013.
· Industrivärden, which holds 23.4% of the votes and 18.2% of the capital in
SSAB, and Solidium Oy (”Solidium”), which holds 39.7% of all issued shares in
Rautaruukki, have expressed their full support for the proposed combination.
Solidium has undertaken to accept the share exchange offer. Industrivärden
intends to remain as a long-term main owner of the combined company holding
17.5% of the votes and 10.5% of the capital in the combined company. Solidium
will hold 10.0% of the votes and 16.8% of the capital in the combined company.
· The proposed combination is subject to, inter alia, valid tender of more
than 90% of Rautaruukki shares by Rautaruukki shareholders and clearance from
regulatory authorities, including receipt of approvals from all applicable
competition authorities.
· The proposed combination is subject to the shareholders of SSAB passing the
resolutions necessary to implement the combination and the share exchange offer.
Industrivärden has undertaken to support such resolutions.
· The Board of Directors of Rautaruukki has decided to recommend the
shareholders to accept the share exchange offer. The initial acceptance period
will commence in late March or early April 2014 and is expected to close in late
April or early May 2014. The initial acceptance period shall be four weeks,
subject to any extensions of the share exchange offer. The share exchange offer
will be completed within 10 banking days from the offer becoming unconditional.
The proposed combination
· The proposed combination is expected to create substantial value for
shareholders in both SSAB and Rautaruukki stemming from both improved earnings
potential and realization of tangible cost synergies.
· Annual cost synergies of up to SEK 1.4 billion (EUR 150 million) are
expected, partly depending on the prevailing market conditions and matching
production scenarios. Full synergy capture is expected within three years
following the proposed combination. The full synergies post-tax represent
approximately SEK 2 (EUR 0.2) per share in the combined company.[5]
· One-off cash costs of achieving the synergies are expected to amount to
approximately
SEK 350 million (EUR 40 million).
· The cost synergies are expected to be realized through a more flexible and
efficient production system, more efficient supply chain, purchasing
optimization and streamlined administration.
· In addition, the combination is expected to result in decreased working
capital requirements and avoidance of some future investments that could
otherwise have been duplicated.
· The combined company will have a solid balance sheet with a preliminary
combined net debt of SEK 21.9 billion (EUR 2.5 billion) and net gearing of 59%
as of September 30, 2013. The preliminary combined sales of the combined company
in 2012 amounted to approximately SEK 63 billion (EUR 7.3 billion).
· The proposed combination is a natural step to strengthen competitiveness in
the European part of the steel operations by improving the cost position and
increasing the production flexibility in order to better adapt to changes in
market demand.
· The combined company will have a global position and product offering within
high strength steels, standard strip and plate products as well as tubular
products. The combination will enhance the ability to invest in product
development, R&D and close collaboration with customers.
· The combined company will have a global geographic presence and be close to
its customers in all regions.
· SSAB’s construction related operations (Plannja) will be combined with
Ruukki’s Building Products and Ruukki´s Building Systems operations to form a
separate construction business division. This is expected to generate additional
synergies.
· Following the completion of the share exchange offer, the combined company
will apply for a secondary listing on NASDAQ OMX Helsinki. The combined
company’s domicile and headquarters will be in Stockholm.
Sverker Martin-Löf, Chairman of SSAB’s Board of Directors, commented:
- “In the steel industry, a combination of SSAB and Rautaruukki has for long
been considered logical and the time is now right to pursue this transaction.
For SSAB, the proposed acquisition, which is accretive to SSAB´s shareholders,
creates a much more flexible European manufacturing platform that positions the
company to profitably meet customer demand in the long term. A prerequisite for
the Board of Directors of SSAB to recommend the bid has been Industrivärden’s
commitment to remain as the lead active shareholder in supporting the company’s
future development.”
Kim Gran, Chairman of Rautaruukki’s Board of Directors, added:
- “The proposed combination has been carefully planned and evaluated and is
expected to be highly value creating for the benefit of shareholders of both
companies. For us in Rautaruukki this is a natural strategic step which will
improve focus and productivity and safeguard a world-class Nordic steel
industry. The synergy potential both in steel and construction is significant
and offers an excellent platform for improved operations and results.”
Martin Lindqvist, President and CEO of SSAB, said:
- “The proposed combination of SSAB and Rautaruukki is based on clear industrial
logic. The identified synergies will significantly improve the efficiency and
industrial flexibility of the combined company. This combination will enable us
to do more for our customers, and internally be more flexible in adapting supply
to market demand in all periods of the steel business cycle.”
Sakari Tamminen, President and CEO of Rautaruukki, commented:
- ”I believe that the combination of Ruukki and SSAB gives an excellent
opportunity to continue the rationalization of the cost base of the companies
and build a new Nordic steel producer, that is able to transit the steel
business towards a global special steel company. Ruukki has moved in this
direction and this transaction is a major opportunity to speed up the transition
with synergy benefits. This demands a successful integration based on the
principle of putting the best skills and people in each position. There is also
a good synergy potential in the construction business which offers profitable
growth potential on top of the synergy benefits. Ruukki people are used to
seeing changes as opportunities.”
Information about the combined company, preliminary combined financial
information, the principal terms and conditions of the combination agreement and
the share exchange offer are set out below and in the appendices to this stock
exchange release.
Additional information about the proposed combination and the share exchange
offer will be made available to SSAB’s shareholders in connection with the
annual general meeting of shareholders that will address proposed resolutions
necessary to implement the combination and the share exchange offer and in a
share exchange offer document and prospectus to Rautaruukki’s shareholders prior
to the commencement of the share exchange offer. The transaction is subject to
regulatory competition approval in the European Union and in a limited number of
other jurisdictions.
Press and analyst conferences
A joint press conference will be held today, January 22, 2014, at 09:00 CET
(10:00 EET), in Stockholm with the Chairmen of SSAB and Rautaruukki, Sverker
Martin-Löf and Kim Gran, and Presidents and CEOs of SSAB and Rautaruukki, Martin
Lindqvist and Sakari Tamminen. In addition, a joint press conference will be
held today January 22, 2014 at 15:00 EET (14:00 CET), in Helsinki, with the
Chairmen of SSAB and Rautaruukki and the CEOs of SSAB and Rautaruukki. Please
see Appendix 3 for additional details.
Rationale for the proposed combination
The proposed combination of SSAB and Rautaruukki creates a steel company with a
cost efficient and flexible production system in the Nordic region. The combined
company will have a competitive position and product offering within high
strength steels, standard strip and plate products as well as tubular products.
Both SSAB and Rautaruukki have close relationships with customers in their key
markets and complement each other geographically. The combination will release
further resources for strengthening R&D and maintaining leadership in product
development.
The global steel industry has over the past few years been characterized by
overcapacity. Coupled with the challenging economic conditions, particularly in
Europe, this has resulted in falling steel prices and lower, but also more
volatile, demand. Adding to that the impact of continued high raw materials
prices, profitability for steel companies has fallen.
The Boards of Directors of both companies strongly believe that the proposed
combination of SSAB and Rautaruukki creates the best possible conditions for the
two companies to secure a future with long-term profitability in their Europe
-based operations that would benefit customers, shareholders and other key
stakeholders in an industry vital to both Finland and Sweden.
The combined company
Overview
The combined company becomes one of the leading producers on the global market
for high strength steels, standard strip and plate products as well as tubular
products. The preliminary combined net sales for 2012 amounted to approximately
SEK 63 billion (EUR 7.3 billion) and SSAB and Rautaruukki combined will have
around 17,500 employees. The combined company will have steel production
facilities in Sweden, Finland and the United States with a combined annual steel
production capacity of 8.8 million tons.
The combined company will be led by the President and CEO of SSAB, Martin
Lindqvist. The President and CEO of Rautaruukki, Sakari Tamminen, will continue
as President and CEO of Rautaruukki until completion of the share exchange
offer, when he will use his right to retire at the age of 60.
Strategy
The combined company will maintain SSAB´s and Rautaruukki’s strategy of serving
local and global markets with quality steel products and value added services.
The company will continue to develop and accelerate new fields of applications
to provide productivity, energy efficiency and environmental advantages for
customers through the use of high strength steels. With a broadened sales
organization, the combined company will be able to further develop its customer
collaboration abilities.
In order to best execute on both operational and strategic matters, the plan is
to organize the company through a divisional model with clear profit and loss
responsibilities. The organization will be centered around the following areas:
· Quenched & Tempered Steels, division led from Sweden by Melker Jernberg
· European Flat Carbon Steels (mainly Strip), division led from Finland by
Olavi Huhtala
· American Flat Carbon Steels (mainly Plate), division led from USA by Charles
Schmitt
· Nordic Steel Distribution, division led from Sweden by Mikael Nyquist
· Construction Products & Systems, division led from Finland by Marko Somerma
Synergies
Annual cost synergies of up to SEK 1.4 billion (EUR 150 million) are expected.
The cost synergies are expected to be realized through a more flexible and
efficient production system, more efficient supply chain, purchasing
optimization and streamlined administration. Full synergy capture is expected
within three years following the proposed combination. The realization of
synergies should be facilitated by the geographic and cultural proximity of the
companies.
The synergy levels will partly depend on the prevailing market conditions and
matching production scenarios. Out of the estimated total annual synergies, some
SEK 350 million (EUR 40 million) will be achievable in periods of low market
demand through improved flexibility in adapting production capacity to
prevailing steel demand, while maintaining a cost-efficient level of utilization
in the blast furnaces and mills.
In addition to cost synergies, there is a potential to avoid overlapping
investments in the future and to reduce net working capital. One-off costs with
cash flow impact resulting from the proposed combination are expected to amount
to approximately SEK 350 million (EUR 40 million). The combined company will
also benefit from a more balanced currency exposure.
The construction related operations of SSAB and Rautaruukki (specifically,
Plannja and Ruukki Building Products and Ruukki Building Systems) will be
combined to form a separate construction business division.
Employees
At the end of September 2013, SSAB had approximately 8,700 and Rautaruukki
approximately 8,700 employees. Parts of the synergies are expected to be derived
from reduced headcount over time. The estimated reduction in headcount, mainly
in Sweden and in Finland, is approximately 5% of the total headcount in the
combined company. This is estimated to be realized over a three-year period
following the completion of the combination. SSAB and Rautaruukki will inform,
consult and negotiate with relevant employee organizations regarding the social,
economic and legal consequences of the proposed combination in accordance with
the applicable legal requirements.
Corporate governance and ownership structure
Assuming full acceptance of the share exchange offer, SSAB’s current
shareholders will hold 58% of the capital and 75% of the votes and Rautaruukki’s
current shareholders will hold 42% of the capital and 25% of the votes in the
combined company.
The Chairman of SSAB, Sverker Martin-Löf, will be Chairman of the Board of
Directors of the combined company. Following completion of the share exchange
offer, the combined company’s nomination committee will continue to strive to
nominate the most competent Board of Directors, also taking into consideration
the new ownership structure of the combination. The two largest shareholders
subject to completion of the share exchange offer, Industrivärden and Solidium,
have expressed their respective intention to support each other in SSAB’s
nomination committee, based on the understanding that Industrivärden shall
nominate the Chairman of the Board and two additional members of the Board, and
that Solidium shall nominate two members of the Board to be elected at an
Extraordinary General Meeting of the shareholders of SSAB, to be held as soon as
reasonably practicable following the completion of the share exchange offer. The
above expressed intention by Industrivärden and Solidium respectively, shall
remain until the earlier of (i) 24 months having passed from the completion of
the share exchange offer and (ii) the number of votes held by the other
shareholder having fallen below 10% of all votes in SSAB.
The Board of Directors of SSAB has undertaken to, as soon as practicable
following the completion of the share exchange offer, call for an Extraordinary
General Meeting of SSAB to elect new members to the Board of Directors of SSAB
proposed by its nomination committee.
The combined company will have a primary listing on NASDAQ OMX Stockholm and
will, at or following the completion of the share exchange offer, apply for a
secondary listing on NASDAQ OMX Helsinki. The combined company will continue to
be domiciled and headquartered in Stockholm. The combined company will follow
those rules and regulations for corporate governance being applicable for a
company having a listing on NASDAQ OMX Stockholm and secondarily on NASDAQ OMX
Helsinki.
Preliminary combined financial information
Basis for preparation
The unaudited financial information presented herein is based on SSAB’s and
Rautaruukki’s audited financial statements for the full year 2012 and the
unaudited financial reports for the period January-September, 2013, which have
been prepared in accordance with IFRS.
The combined financial information is for illustrative purposes only. The
combined financial information gives an indication of the combined company’s
sales and earnings assuming the activities were included in the same group from
the beginning of each period.
The combined financial information is based on a hypothetical situation and
should not be viewed as pro forma financial information as purchase price
allocation, differences in accounting principles and transaction costs have not
been taken into account. The difference between transaction value and
Rautaruukki’s book equity has been allocated to fixed assets. The expected
synergies have not been included. The combined financial information has not
been audited or otherwise reviewed by SSAB’s or Rautaruukki’s auditors.
The transaction value has been calculated based on the closing prices of the
SSAB class A and class B shares as of January 21, 2014, SEK 48.47 and 40.80,
respectively and a SEK/EUR exchange rate of 8.807. Rautaruukki’s income
statement has been converted to SEK using the average SEK/EUR exchange ratio for
2012 (8.704) and Q1-Q3, 2013 (8.583), respectively. Rautaruukki’s balance sheet
information has been converted to SEK based on the SEK/EUR exchange ratio per
September 30, 2013 (8.658).
For the purposes of financial reporting, the actual combination of SSAB and
Rautaruukki will, however, be calculated based on the transaction value and the
fair values of Rautaruukki’s identifiable assets and liabilities at the date of
exchange of control. Balance sheet items could therefore differ significantly
from the combined financial information presented herein and, as a result, have
a significant impact on other items included in the income statement of the
combined company.
Combined income statement and cash flow information and key figures[6]
++----------++--------+------+-------++--------+------+------+
|| |Full ||Jan-Sep, |
|| |year ||2013 |
|| |2012 ||(SEK |
|| |(SEK ||million) |
|| |million) || |
++----------++--------+------+-------++--------+------+------+
|| |Combined|SSAB |Rauta ||Combined|SSAB |Rauta-|
|| |company | |-ruukki||company | |ruukki|
|| | | | || | | |
++----------++--------+------+-------++--------+------+------+
|Sales ||63,259 |38,923|24,336 ||41,680 |26,102|15,578|
++----------++--------+------+-------++--------+------+------+
| || | | || | | |
++----------++--------+------+-------++--------+------+------+
|Gross ||4,014 |2,794 |1,219 ||2,802 |1,252 |1,550 |
|profit || | | || | | |
++----------++--------+------+-------++--------+------+------+
|Gross ||6.3% |7.2% |5.0% ||6.7% |4.8% |10.0% |
|margin || | | || | | |
++----------++--------+------+-------++--------+------+------+
| || | | || | | |
++----------++--------+------+-------++--------+------+------+
|EBITDA ||2,968 |2,491 |477 ||2,157 |1,049 |1,108 |
++----------++--------+------+-------++--------+------+------+
|EBITDA ||4.7% |6.4% |2.0% ||5.2% |4.0% |7.1% |
|margin || | | || | | |
++----------++--------+------+-------++--------+------+------+
| || | | || | | |
++----------++--------+------+-------++--------+------+------+
|EBIT ||-977 |-96 |-881 ||-595 |-849 |254 |
++----------++--------+------+-------++--------+------+------+
|EBIT margin||-1.5% |-0.2% |-3.6% ||-1.4% |-3.3% |1.6% |
++----------++--------+------+-------++--------+------+------+
| || | | || | | |
++----------++--------+------+-------++--------+------+------+
|Net profit ||-1,008 |15 |-1,023 ||-832 |-801 |-31 |
++----------++--------+------+-------++--------+------+------+
|Earnings ||-1.80 |0.05 |-7.36 ||-1.49 |-2.47 |-0.22 |
|per share || | | || | | |
|(SEK) || | | || | | |
++----------++--------+------+-------++--------+------+------+
| || | | || | | |
++----------++--------+------+-------++--------+------+------+
|Operating ||6,424 |4,929 |1,494 ||2,280 |1,381 |898 |
|cash flow || | | || | | |
++----------++--------+------+-------++--------+------+------+
|Capital ||-2,289 |-1,431|-859 ||-1,097 |-518 |-579 |
|expenditure|| | | || | | |
|payments || | | || | | |
++----------++--------+------+-------++--------+------+------+
| || | | || | | |
++----------++--------+------+-------++--------+------+------+
|Steel ||5,993 |4,184 |1,809 ||4,603 |3,255 |1,348 |
|shipments || | | || | | |
|(thousand || | | || | | |
|tonnes) || | | || | | |
++----------++--------+------+-------++--------+------+------+
|| || | | || | | |
++----------++--------+------+-------++--------+------+------+
Combined balance sheet information and credit metrics [7]
(http://connect.ne.cision.com#_edn6)
30 September 2013 (SEK million)
Combined company SSAB Rautaruukki
Total fixed assets 52,451 39,379 11,859
Current assets excl. cash 22,851 14,898 7,952
Cash and cash equivalents 2,458 2,193 265
Total current assets 25,308 17,091 8,217
Total assets 77,759 56,470 20,076
Total equity 37,389 27,284 8,892
Total long-term liabilities 26,877 21,663 5,213
Total short-term liabilities 13,494 7,523 5,971
Total equity and liabilities 77,759 56,470 20,076
Net debt 21,904 14,968 6,565
Net debt/equity ratio 59% 55% 74%
The combination in brief
The share exchange offer
Pursuant to the terms and conditions of the combination agreement, SSAB makes an
offer to Rautaruukki’s shareholders to exchange each Rautaruukki share for newly
issued SSAB shares in accordance with the following terms:
· For each Rautaruukki share, 0.4752 newly issued SSAB class A shares and
1.2131 newly issued class B shares are offered. The total value of the share
exchange offer amounts to SEK 10.1 billion (EUR 1.1 billion), which has been set
to achieve a fair split of synergy values between the two shareholder groups and
a fair premium for Rautaruukki’s shareholders. No commission will be charged.
· Fractional entitlements to new SSAB shares will be aggregated and sold in
the market and the proceeds, after deducting the direct sales costs, will be
distributed pro rata to Rautaruukki shareholders being entitled thereto.
· The newly issued SSAB shares will also be registered in the Finnish book
-entry system maintained by Euroclear Finland. The measures to be taken by
holders of such shares in order to exercise voting rights and to be entitled to
dividends, as well as other information being relevant to the holders thereof,
will be set out in the share exchange offer document and prospectus.
· Shares in SSAB issued as consideration under the share exchange offer
entitle to dividend for the first time on the first record day for dividend
occurring after the day when the new shares were entered into SSAB’s share
register. Such shares entitle the holders to all shareholder rights as of
registration.
Conditions for completion of the share exchange offer
The completion of the share exchange offer shall be subject to, inter alia,
valid tender of more than 90% of Rautaruukki shares by Rautaruukki shareholders
and clearance from regulatory authorities, including receipt of approvals from
all applicable competition authorities, as set out in the combination agreement.
The share exchange offer and, consequently, the proposed combination will be
effected in accordance with the terms and conditions of the combination
agreement. A summary of the principal terms and conditions of the combination
agreement is provided in Appendix 2.
The detailed terms and conditions of the share exchange offer and information on
how to accept the share exchange offer will be included in the share exchange
offer document and prospectus expected to be published by SSAB in late March or
early April 2014.
SSAB has undertaken to follow the recommendation regarding the procedures to be
complied with in takeover bids (Helsinki Takeover Code) issued by the Finnish
Securities Market Association as referred to in the Finnish Securities Market
Act.
As of December 31, 2013 SSAB had 323.9 million shares outstanding, consisting of
240.8 million class A shares (74% of outstanding shares) and 83.2 million class
B shares (26% of outstanding shares). Rautaruukki has 138.9 million shares
outstanding (excluding treasury shares). Assuming full acceptance of the share
exchange offer, SSAB issues 66.1 million class A shares (28% of total shares
offered) and 168.6 million class B shares (72% of total shares offered) to
Rautaruukki’s shareholders. For the combined company, the total outstanding
shares will be 558.6 million, consisting of 306.8 million class A shares (55% of
outstanding shares) and 251.8 million class B shares (45% of outstanding
shares). Each class A share entitles the holder to one vote and each class B
share entitles the holder to one-tenth of one vote. There are no other
differences between the SSAB share classes. The mix of class A shares and class
B shares offered results in Solidium having 10.0% of the votes in the combined
company. SSAB does not currently own any shares in Rautaruukki.
Financing
The financing for the combined company has been secured through term sheets and
commitment letters from a few of SSAB’s key relationship banks.
Preliminary timetable
The annual general meeting (“AGM”) of SSAB is expected to be held on April 9,
2014 and the AGM documentation will be published no later than three weeks prior
to that date. The combined offer document in respect of the share exchange offer
and prospectus for the newly issued shares of SSAB will be prepared as promptly
as reasonably practicable and is intended to be made available to Rautaruukki
shareholders in late March or early April 2014. The acceptance period will
commence shortly thereafter and is expected to close in late April or early May
2014. SSAB reserves the right to extend the acceptance period. Settlement is
expected to begin, if the share exchange offer becomes unconditional, in late
April or early May 2014, subject to any extensions of the share exchange offer.
The proposed combination and the share exchange offer are subject to regulatory
competition approval in the European Union, and in a limited number of other
jurisdictions and the preliminary timetable is therefore dependent on this
process.
Rautaruukki recommendations and shareholder support
The Board of Directors of Rautaruukki considers the terms of the share exchange
offer to be fair from a financial point of view to the shareholders of
Rautaruukki and considers the proposed combination to be in the best interests
of Rautaruukki’s shareholders. The Board of Directors of Rautaruukki unanimously
recommends Rautaruukki shareholders to accept the share exchange offer. The
Board of Directors of Rautaruukki has received a fairness opinion from its
financial advisor UBS Limited. The Board of Directors of Rautaruukki will issue
its complete statement on the share exchange offer in accordance with the
Finnish Securities Market Act prior to the publication of the share exchange
offer document and prospectus.
Solidium, which holds 39.7% of all issued shares in Rautaruukki has expressed
its full support for the combination and has undertaken to accept the share
exchange offer, which undertaking will terminate in certain circumstances
related to the provisions of the combination agreement.
Rautaruukki shareholders Ilmarinen Mutual Pension Insurance Company, holding
2.99% of the shares in Rautaruukki, and Varma Mutual Pension Insurance Company,
holding 2.51% of the shares in Rautaruukki, have expressed their preliminary
support for the combination.[8]
SSAB shareholders’ meeting
The proposed combination is subject to the shareholders of SSAB passing the
resolutions necessary to implement the combination and the share exchange offer.
SSAB’s largest shareholder, Industrivärden, holding 23.4% of the votes and 18.2%
of the capital in SSAB, has announced its full support for the combination and
has undertaken to vote for the necessary corporate resolutions in SSAB and not
to sell its shares prior to the completion of the proposed combination, which
undertaking will terminate in certain circumstances related to the provisions of
the combination agreement. Industrivärden intends to remain as a long-term main
owner of the combined company.
Advisors
SSAB is being advised by Handelsbanken Capital Markets and Access Partners, as
financial advisors, and Mannheimer Swartling Advokatbyrå, White & Case LLP and
Morrison & Foerster LLP as legal advisors. Rautaruukki is being advised by UBS
Limited as lead financial advisor, Roschier, Attorneys Ltd. as legal advisor and
Nordea Markets as financial advisor.
This information is published by SSAB pursuant to the requirements of the
Finnish Securities Market Act and the Swedish Securities Market Act. Submitted
for publication at 07.00 CET, January 22, 2014.
Stockholm, January 22, 2014 Helsinki, January 22, 2014
SSAB AB (publ) Rautaruukki Oyj
Important notice
This release may not be released or otherwise distributed, in whole or in part,
in or into the United States of America, Australia, Canada, Hong Kong, Japan,
New Zealand, South Africa or any other jurisdiction where prohibited by
applicable laws or rules. This release is not a share exchange offer document or
a prospectus and as such does not constitute an offer or invitation to make a
sales offer. Investors shall accept the share exchange offer for the shares only
on the basis of the information provided in a share exchange offer document and
prospectus in respect of the share exchange offer. Offers will not be made
directly or indirectly in any jurisdiction where either an offer or
participation therein is prohibited by applicable law or where any exchange
offer document or registration or other requirements would apply in addition to
those undertaken in Finland and Sweden.
The share exchange offer document and prospectus in respect of the share
exchange offer as well as related acceptance forms will not and may not be
distributed, forwarded or transmitted into, in or from any jurisdiction where
prohibited by applicable law. In particular, the share exchange offer is not
being made, directly or indirectly, in or into, Australia, Canada, Hong Kong,
Japan, New Zealand, South Africa or, subject to certain exceptions, the United
States of America. The share exchange offer cannot be accepted from within
Australia, Canada, Hong Kong, Japan, New Zealand, South Africa or, subject to
certain exceptions, the United States of America.
The SSAB shares have not been and will not be registered under the U.S.
Securities Act of 1933, as amended (the “Securities Act”), or under any of the
relevant securities laws of any state or other jurisdiction of the United States
of America. The SSAB shares may not be offered or sold in the United States,
except pursuant to an exemption from the Securities Act or in a transaction not
subject to the registration requirements of the Securities Act.
It should be noted that certain statements herein which are not historical
facts, including, without limitation, those regarding expectations for general
economic development and the market situation, expectations for the combined
company’s development and profitability and the realization of synergy benefits
and cost savings, and statements preceded by “expects”, ”estimates”, ”forecasts”
or similar expressions, are forward-looking statements. These statements are
based on current decisions and plans and currently known factors. They involve
risks and uncertainties which may cause the actual results to materially differ
from the results currently expected for the combined company. Such factors
include, but are not limited to, general economic conditions, including
fluctuations in exchange rates and interest levels which influence the operating
environment and profitability of customers and thereby the orders received by
the combined company and their margin; the competitive situation; the combined
company’s own operating conditions, such as the success of production and
product development and their continuous development and improvement; and the
success of future acquisitions.
Appendix 1: Information on SSAB and Rautaruukki in brief
Brief information on SSAB
SSAB is one of the leading steel producers in Northern Europe and North America
and one of the leading producers of high strength steels globally. The company
has a 6 million ton capacity for crude steel with production of both strip and
plate high strength steels and standards steels. SSAB has production plants in
Sweden and in the United States. There is also capacity to process and finish
various steel products in China. In Sweden, the steel production is performed
with blast furnace based processes. In the United States, production is scrap
-based in electric arc furnaces. SSAB employs approximately 8,700 persons in 45
countries. In 2012, SSAB’s sales amounted to approximately SEK 38.9 billion (EUR
4.5 billion).
High strength steels made by SSAB are sold all over the world. High strength
steels contribute to lighter weight of the end product, as compared to the use
of standard steel. High strength steels also increase strength and longevity of
end-use applications. SSAB markets its steel products under the trademarks
Domex, Docol, Prelaq, Hardox, Weldox, Armox, and Toolox.
SSAB steel related activities are divided among three geographic business areas:
· SSAB EMEA – Europe, Middle East, and Africa
· SSAB Americas – North America and Latin America
· SSAB APAC – Asia and Oceania
The steel distributor Tibnor and the sheet metal manufacturer Plannja are wholly
owned subsidiaries of SSAB. SSAB’s shares are listed on NASDAQ OMX Stockholm.
For more information about SSAB, please refer to www.ssab.com.
Brief information on Rautaruukki
Rautaruukki specializes in steel and steel construction. Rautaruukki provides
customers with energy-efficient steel solutions for better living, working and
moving. Rautaruukki has approximately 8,700 employees and an extensive
distribution and dealer network across some 30 countries in the Nordics, Europe,
Russia and emerging markets, including India, China and South America.
Rautaruukki has a steel production plant with an annual capacity of 2.8 million
tons located in Raahe, Finland and a steel processing and coating plant in
Hämeenlinna, Finland. Construction business has steel structure plants as well
as panel and roofing processing units in e.g. Finland, Russia, Lithuania, Poland
and Romania. Rautaruukki’s net sales in 2012 totalled EUR 2.8 billion (SEK 24.3
billion).
Rautaruukki’s vision is to be an innovative and acknowledged provider of energy
-efficient steel solutions to build a better living environment together with
its customers. Rautaruukki’s activities are divided into three business areas:
Ruukki Metals, which provides special steel products, including high strength,
wear-resistant, special coated and tubular products for demanding energy
-efficient applications with known product brands Raex, Laser, Optim, Ramor and
Litec. Steel service centres supply steel products and related prefabrication,
logistics and storage services. Rautaruukki Metals business area employees a
total of around 5,200 people.
Ruukki Building Products, which provides energy- and life-cycle -efficient
building components such as Ruukki energy and life panels for functional
envelopes to commercial, industrial and logistics buildings as well as
foundation components for infrastructure constructions. Residential roofing
business provides steel roofing products and services for private households.
There are some 1,200 employees in Rautaruukki Building Products.
Ruukki Building Systems, which provides steel structures including design and
installation and solutions for commercial, office and industrial construction
projects especially in the Nordic countries and in Russia. This business area
has some 2,000 employees.
Fortaco, a system component manufacturer for the mechanical engineering
industry, is partly owned by Rautaruukki.
Rautaruukki’s shares are listed on NASDAQ OMX Helsinki. For more information
about Rautaruukki, please refer to www.ruukki.com.
Appendix 2: Summary of combination agreement
The combination agreement entered into by and between SSAB and Rautaruukki prior
to the publication of the share exchange offer, sets out the principal terms
under which SSAB will make a share exchange offer to the shareholders of
Rautaruukki.
Under the combination agreement, the Board of Directors of Rautaruukki
undertakes to issue a formal recommendation to the shareholders of Rautaruukki
to accept the share exchange offer. The Board of Directors of Rautaruukki may
nevertheless decide not to issue, modify, cancel or change its recommendation in
certain circumstances in order to comply with its fiduciary duties, including in
case of (i) a competing, more favourable offer being published, or (ii) the
share exchange offer no longer being in the best interest of the shareholders of
Rautaruukki, inter alia, due to materially changed circumstances. SSAB is
entitled to withdraw the share exchange offer if the Board of Directors of
Rautaruukki decides not to issue, modify, cancel or change its recommendation.
Each of Rautaruukki and SSAB has undertaken not to initiate, solicit or
encourage any competing offers or proposals for offers or other transactions
competing with the share exchange offer, nor to facilitate or promote the
progress of such proposals. Rautaruukki has also agreed to inform SSAB of any
competing proposals and to provide SSAB with an opportunity to negotiate with
the Board of Directors of Rautaruukki in matters arising from such competing
proposals.
The combination agreement also contains certain customary representations and
warranties and undertakings by each of SSAB and Rautaruukki, such as each party
conducting its businesses in the ordinary course of business before the
completion of the share exchange offer, and cooperation by the parties in making
necessary regulatory filings. SSAB has also, upon completion of the share
exchange offer, undertaken to use its reasonable best efforts to comply with and
implement a governance plan and an industrial plan attached to the combination
agreement.
The completion of the share exchange offer shall be subject to the fulfilment
or, to the extent permitted by applicable laws and regulations, waiver by SSAB
of the following conditions on the date of SSAB’s announcement of the final
result of the share exchange offer in accordance with Chapter 11, Section 18 of
the Finnish Securities Market Act:
· the valid tender of Rautaruukki shares representing, together with any other
Rautaruukki shares otherwise held by SSAB prior to the result announcement date,
more than ninety percent (90%) of the issued and outstanding shares and voting
rights of Rautaruukki calculated in accordance with Chapter 18, Section 1 of the
Finnish Companies Act governing the right and obligation to commence compulsory
redemption proceedings;
· the receipt of all necessary regulatory approvals, permits and consents,
including without limitation competition clearances, and that any conditions set
in such permits, consents or clearances, including, but not limited to, any
requirements for the disposal of any assets of SSAB or Rautaruukki or any
reorganization of the business of SSAB or Rautaruukki, are reasonably acceptable
to SSAB in that they do not result in a material adverse change in the combined
group;
· no legislation or other regulation having been issued or decision by a
competent court or regulatory authority, including the Finnish Financial
Supervisory Authority and the Swedish Financial Supervisory Authority, having
been given that would wholly or partly prevent the completion of the share
exchange offer or result in a material adverse change in the combined group;
· no information made public by Rautaruukki or disclosed by Rautaruukki to
SSAB being materially inaccurate, incomplete, or misleading, and Rautaruukki not
having failed to make public any information that should have been made public
by it under applicable laws and regulations, provided that such disclosure or
failure to disclose information constitutes a material adverse change in
Rautaruukki and its subsidiaries, taken as a whole;
· no fact or circumstance having arisen after the announcement of the share
exchange offer that constitutes a material adverse change in respect of
Rautaruukki and its subsidiaries, taken as a whole;
· the Board of Directors of Rautaruukki having issued its recommendation and
the recommendation remaining in full force and effect and not having been
modified, cancelled or changed;
· the combination agreement not having been terminated and remaining in full
force and effect;
· the undertaking by Solidium to accept the share exchange offer remaining in
full force and effect in accordance with its terms; and
· the general meeting of shareholders of SSAB having passed all necessary
resolutions for the completion of the combination and the share exchange offer.
SSAB shall only invoke any of the closing conditions so as to cause the share
exchange offer not to proceed, to lapse or to be withdrawn if the circumstances,
which give rise to the right to invoke the relevant closing condition, have
material importance (in Finnish, olennainen merkitys) to SSAB in view of the
share exchange offer, as referred to in the Regulations and Guidelines 9/2013
(Julkinen ostotarjous ja tarjousvelvollisuus) issued by the Finnish Financial
Supervisory Authority and in the Helsinki Takeover Code.
Subject to SSAB acquiring more than ninety per cent of the issued and
outstanding shares and voting rights of Rautaruukki, SSAB has undertaken to
commence compulsory redemption proceedings of the remaining shares of
Rautaruukki and to cause the Rautaruukki shares to be delisted from NASDAQ OMX
Helsinki.
Upon completion of the share exchange offer, SSAB shall cause the shares of SSAB
to be secondarily listed on NASDAQ OMX Helsinki and the SSAB shares given as
consideration in the share exchange offer to be listed on NASDAQ OMX Stockholm
and secondarily listed on NASDAQ OMX Helsinki.
Rautaruukki shares held by Rautaruukki in treasury, currently amounting to
1,396,152 shares, are excluded from the share exchange offer.[9]
Each of SSAB and Rautaruukki may terminate the combination agreement in case of
a material breach by the other party of any of the warranties, undertakings or
covenants under the agreement, or in case the share exchange offer has not been
completed by October 1, 2014, which may be extended by either party by up to
three months. In addition, each of SSAB and Rautaruukki may terminate the
agreement, inter alia, where information made public, or disclosed by one party
to the other, is materially inaccurate, incomplete, or misleading, or where a
material adverse change has occurred after the announcement of the share
exchange offer.
In case of any termination or expiration of the combination agreement in
accordance with its terms and conditions, SSAB is entitled to withdraw the share
exchange offer. If the agreement is terminated by either of SSAB and
Rautaruukki, the other party may be entitled to compensation of out-of-pocket
costs incurred in connection with the preparation of the combination between
Rautaruukki and SSAB covering the period of twelve months prior to the date of
the combination agreement, provided that
(i) in the case of Rautaruukki, the share exchange offer is
withdrawn by SSAB pursuant to the combination agreement having been terminated
by Rautaruukki due to the fact that the regulatory approvals have not been
obtained by October 1, 2014, which may be extended by either party by up to
three months, and
(ii) in the case of SSAB, the combination agreement has been
terminated by SSAB because (i) the Board of Directors of Rautaruukki has decided
not to issue, or has modified, cancelled or changed, its recommendation as a
result of a competing offer or a serious competing proposal, or (ii) a competing
offer has been completed.
Appendix 3: Press and analyst conferences and contact persons
A joint press conference will be held today, January 22, 2014, at 09:00 CET
(10:00 EET), in World Trade Center (WTC) Stockholm, Kungsbron 1, conference room
Manhattan with the Chairmen of SSAB and Rautaruukki, Sverker Martin-Löf and Kim
Gran, and Presidents and CEOs of SSAB and Rautaruukki, Martin Lindqvist and
Sakari Tamminen.
The press conference will also be broadcast live via the Internet at:
http://storm.zoomvisionmamato.com/player/ssab/objects/01c576b2/
It is also possible to participate and ask questions by telephone:
Sweden: +46 850 55 64 74
Finland: +358 98 17 10 460
UK: +44 203 364 53 74
USA: +1 855 753 22 30
A presentation will be made available on SSAB’s and Ruukki’s websites before the
press conference starts.
In addition, a joint press conference will be held later today, January 22,
2014, at 15:00 EET (14:00 CET), in Helsinki, at hotel Kämp, Mirror room,
2ndfloor, address Kluuvikatu 2, with the Chairmen of SSAB and Rautaruukki and
the Presidents and CEOs of SSAB and Rautaruukki.
For further information please contact:
+----------------------------------+----------------------------------+
|SSAB |Rautarukki |
+----------------------------------+----------------------------------+
|Andreas Koch |Taina Kyllönen |
|Director, Investor Relations |SVP Marketing and Communications |
|+46 70 509 77 61 |+358 20 592 9040 |
|andreas.koch@ssab.com |taina.kyllonen@ruukki.com |
+----------------------------------+----------------------------------+
|Marie Elfstrand |Atte Kaksonen |
|Director, External Cmmunications |Director, Corporate Communications|
|+46 70 279 71 84 |+358 20 593 8596 |
|marie.elfstrand@ssab.com |atte.kaksonen@ruukki.com |
+----------------------------------+----------------------------------+
|Maria Långberg | |
|EVP & Head of Group Communications| |
|+46 8 454 5727 | |
|maria.langberg@ssab.com | |
+----------------------------------+----------------------------------+
Footnotes:
[1] Unless otherwise stated, values in SEK have in this stock exchange release
been converted to EUR at a SEK/EUR exchange ratio of 8.807.
[2] No commission will be charged. Fractional entitlements to new SSAB shares
will be aggregated and sold on the market and the net proceeds distributed pro
rata to Rautaruukki shareholders entitled thereto.
[3] Based on the volume-weighted average share prices of the Rautaruukki share
on NASDAQ OMX Helsinki (EUR 6.60) and the SSAB A and SSAB B shares on NASDAQ OMX
Stockholm (SEK 46.7/EUR 5.27 and SEK 39.5/EUR 4.45 respectively) during the last
three months up to and including January 21, 2014.
[4] Based on the closing prices on January 21, 2014 of the Rautaruukki share on
NASDAQ OMX Helsinki (EUR 6.89) and the SSAB A and SSAB B shares on NASDAQ OMX
Stockholm (SEK 48.47 and 40.80 respectively) and a SEK/EUR exchange rate of
8.807.
[5] Post tax synergies per share calculated using a tax rate of 22%.
[6] Rautaruukki steel shipments include only external steel volumes.
[7] Net debt for SSAB and Rautaruukki is defined as in their respective
financial reports for the period January-September 2013. The combined company’s
net debt is a combination of the figures added with Rautaruukki’s net pension
obligations of SEK 370 million (EUR 43 million) as of December 31, 2012.
[8] Varma Mutual Pension Insurance Company’s shareholding figure is from
December 31, 2013.
[9] 106,000 of Rautaruukki’s treasury shares may be issued as part of
Rautaruukki’s incentive program.
SSAB is a global leader in value added, high strength steel. SSAB offers
products developed in close cooperation with its customers to create a stronger,
lighter and more sustainable world.SSAB has employees in over 45 countries and
operates production facilities in Sweden and the US. SSAB is listed on the
NASDAQ OMX Nordic Exchange, Stockholm. www.ssab.com
SSAB and Rautaruukki to combine through SSAB making a recommended share exchange offer to Rautaruukki’s shareholders
| Source: SSAB AB
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