NEWS

By Tarmo Virki

Markku Teräsvirta, President and CEO, Outotec Matti Alahuhta, Chairman, Board of Outotec Mikael Lilius, Chairman, Board of Metso Pekka Vauramo, and President and CEO, Metso.

Finnish engineering group Metso is merging its main minerals technology business with smaller rival Outotec, Metso said on Thursday, sending shares in both companies higher.

Outotec shares were up 19%, and Metso’s were up 5% in early afternoon trading on the Helsinki bourse.

The new company, to be called Metso Outotec, will be one of the leading technology suppliers to minerals processing companies globally, Metso said, with combined sales of 3.9 billion euros ($4.4 billion) in 2018.

“The strategic plan for the merger is straightforward in our view, creating a larger scale minerals and aggregates business with cost opportunities to improve profitability,” JP Morgan analysts said in a note to clients.

The deal is expected to enable cost savings of at least 100 million euros and revenue synergies, stemming from cross-sales opportunities, of at least 150 million euros a year.

“This is an industry-shaping combination that joins two uniquely complementary companies. It builds on Outotec’s leading technology competencies and Metso’s excellent service capabilities,” Outotec’s Chairman Matti Alahuhta said.

Direct global rivals include Sandvik, FLSmith and Terex among others.

On completion of the deal, Metso shareholders will own approximately 78% of the shares and votes in Metso Outotec, with existing Outotec shareholders holding the remainder.

“The combination will be implemented through a partial demerger of Metso, in which all assets and liabilities of Metso that relate to Metso Minerals will transfer to Outotec in exchange for newly-issued shares in Outotec to be delivered to Metso shareholders,” Metso said in a statement.

In addition, Metso shareholders will retain their current shares in Metso, which will be renamed Neles. Neles’ 2018 sales would have totalled 593 million euros.

Source: MiningDotCom