STOCKHOLM, Sweden, Aug. 21, 2002 (PRIMEZONE) -- The Board of Directors of Sapa AB has considered the mandatory public offer from Elkem Sweden AB, a wholly owned subsidiary of Elkem ASA, to the shareholders, warrant-holders and convertible debenture-holders of Sapa pursuant to a prospectus issued on 12 August, 2002.
The board has considered the offer with assistance from Deutsche Bank. The Board considers that the offer is not clearly unreasonable and, with regard to the factors set out below, reluctantly recommends holders of shares, warrants and convertible debentures in Sapa to accept the offer.
Background
Subsequent to acquisitions of shares in Sapa from February 2001 up to date, Elkem reportedly controls 49,4 per cent of the shares in Sapa.
Elkem is represented on the Board of Sapa by two directors. These directors have not taken part in the Board's consideration of the offer, nor in this recommendation.
The offer is made under the rules on mandatory bids in the recommendation of the Industry and Commerce Stock Exchange Committee with respect to public offers for the acquisition of shares.
Sapa share price performance
The Sapa share price has developed substantially stronger than both the Affarsvarlden General Index and Affarsvarlden Industrial Index on the Stockholm Stock Exchange since the listing of the Sapa share in 1997, thus encompassing a considerable period prior to Elkem's entrance as a shareholder in Sapa.
During the period since Elkem became a substantial shareholder, Sapa's share price has continued to perform strongly relative to the Swedish market indices and in line with other Swedish engineering companies, including among others Atlas Copco, SKF and Sandvik. The Board believes that the strong share price development over this period can partly be attributed to positive developments in the company's financial results and prospects, and partly to Elkem entering as a shareholder in Sapa and the expectations for a public offer that this may have given rise to.
Value considerations
The Board considers that the offer is at the bottom end of the value range indicated by generally accepted valuation methods applied on the Sapa share and its potential for development in the medium and long term, as well as in comparison with comparable listed companies and comparable transactions. The offer can, however, not be considered as clearly unreasonable. The opinion of the Board concurs with a written assessment from a financial point of view by Deutsche Bank.
Further, in assessing the offer the Board has considered the historical very strong Sapa share price development.
Recommendation
The Board considers that the intrinsic value of the Sapa share in a long- term perspective is above the offered SEK 175. The Board would therefore, under normal circumstances, not recommend acceptance of the offer.
However, the Board has not been able to obtain assurances that remaining larger institutional shareholders intend to reject the offer. Hence an already low liquidity in the share runs a risk of being further reduced, with negative effects for efficient trading and price development in the share.
In consideration hereof and the substantial uncertainty existing regarding the short term development of the stock market, the Board reluctantly recommends the shareholders and holders of warrants and convertible debentures in Sapa to accept the offer.
The Board sees as its primary responsibility in issuing this recommendation, to satisfy individuals and minor shareholders need for guidance regarding the offer, as major institutional shareholders may be expected to act independently of the Board recommendation.
Stockholm, 21 August, 2002
The Board of Directors
Questions in relation to this recommendation should be directed to the chairman of the Board Per-Olof Eriksson, telephone +46-26-27 02 02 and President and CEO Staffan Bohman, +46-8-459 59 11.
Sapa is an international industrial group, which develops and markets value-added aluminium profiles, profile-based components and systems, and heat exchanger strip in aluminium. Sapa has an annual turnover of approximately 12 billion SEK, with 6,600 employees all over Europe and in USA and China. Sapa is one of Europe's leading companies within its field and the customers are found in the transport, building, engineering and telecom industries. Sapa is listed on the A-list of Stockholmsborsen.
Further information about Sapa can be found on our web site www.sapagroup.com
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