Ahlstrom and Munksjö to combine, creating a global leader in sustainable and innovative fiber-based solutions |
11-07-2016 13:44:08 GMT
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The Boards of Directors of Munksjö Oyj (\"Munksjö\") and Ahlstrom Corporation (\"Ahlstrom\") announce the combination of the two companies through a merger. The combination will create a global leader in sustainable and innovative fiber-based solutions with preliminary combined annual net sales of approximately EUR 2.2 billion and adjusted EBITDA of EUR 249 millioni. The combined company will have approximately 6,200 employees as well as production in 14 countries.
\"After the very successful integration of our acquired businesses during the past years and strong operating performance, the combination with Ahlstrom is a natural first step in the execution of our growth strategy, combining two leading businesses into one strong engine for performance and growth. The combined company will be positioned for strong long term-financial returns partly through the significant communicated cost synergies but mainly through enhanced future competitiveness and growth opportunities.\" Hans Sohlström, Chairman of the Board of Ahlstrom, continued: \"During the past two years the Ahlstrom management has executed a very focused and successful business turn-around by shedding costs and by focusing on commercial excellence with new products and value adding solutions for our customers. The financial results speak for themselves. The combination now enables us to directly jump into a growth mode with a much stronger balance sheet and greater earnings potential which will benefit our shareholders and our customers as well as other stakeholders. We will together be able to leverage several strategic advantages and we will focus on shareholder returns through increased profits as well as profitable global growth initiatives in the area of sustainable and innovative fiber-based solutions.\" Jan Åström, President and CEO of Munksjö, commented: \"Munksjö and Ahlstrom are two solid and profitable companies with strong cash flows that already today have attractive positions within their respective businesses. Together we will form an even stronger growth platform supported by the cost synergies identified but also by the added top line opportunities. The offerings and market presences are complementary, enabling us to offer our customers a broader range of solutions with a truly global reach. Our collective quality leadership, know-how and innovation capacity will add further value to all customers. About 90 per cent of the combined company\'s products are made from renewable fibers, which will be increasingly important for our sustainability ambitions and footprint going forward.\" Press and analyst conference A joint press conference and conference call will be held today, 7 November 2016, at 11:00 a.m. EET (10:00 a.m. CET), at Restaurant Savoy (Eteläesplanadi 14, 7th floor) in Helsinki, Finland. Please see below for additional details. BACKGROUND TO THE COMBINATION Munksjö and Ahlstrom are both focused on sustainable and innovative fiber-based solutions. The companies have also had a jointly operated site in Turin, Italy since the business combination of Munksjö AB and Ahlstrom\'s Label and Processing business in 2013. For the past years, both companies have focused on streamlining operations and improving operational efficiency with clear results. The combination is a natural next step in the development of the two companies as it has a strong strategic logic and is expected to improve competitiveness. The combination is also expected to increase and create new growth opportunities through the complementary customer bases, product portfolios and geographical footprints of the two companies. The companies also believe that by combining their operations they can achieve further efficiency improvements as well as benefits of scale in the capital markets in the form of increased liquidity, investor interest and analyst coverage. As a result of their history, both companies know each other well and strongly believe the companies will have a good operational fit. Therefore, the Boards of Directors of Munksjö and Ahlstrom have, on 7 November 2016, entered into a combination agreement (the \"Combination Agreement\") and executed a merger plan, pursuant to which the companies will combine. The merger plan and a summary of the Combination Agreement are included as annexes to this stock exchange release. RATIONALE FOR THE COMBINATION The combination will create a global leader in sustainable and innovative fiber-based solutions (more than 90% produced from renewable fibers), with leading global positions in the main product areas decor, filtration and release liners. The combined company will be better positioned to serve customers and will have a strengthened position in the value chain through increased size. Through the combination, a strong and well-established platform will be created with multiple growth opportunities through a broadened customer base, a widened geographical footprint and expanded product and service offerings. Together, the companies will be able to serve a broad range of end-market segments with complementary product and service offerings (e.g., filtration and abrasives to the automotive industry as well as food and beverage packaging and release liners to the food and beverage industry), which creates potential for innovation within new customer-focused solutions. The two companies have complementary geographical footprints, as Munksjö has strong market positions in Europe and South America and Ahlstrom has strong market positions in Europe, North America and Asia, which opens up new geographical growth opportunities through coordination of the product portfolios and distribution and logistics networks. The combined company will have a more diversified revenue and earnings base through this wider geographic footprint and broader product offering and is expected to have a strong financial position and cash flow to support the combined company\'s strategic growth ambitions. The increased size and strengthened capital base also gives potential for increased financing options and lower cost of debt. Furthermore, the combination offers employees enhanced career opportunities, supporting the combined company\'s ability to attract and retain top talent. Synergies The combination is expected to create significant value for the stakeholders in the combined company through synergies resulting from the coordination of the operations of the two companies. Short to mid-term, the annual cost synergies are estimated to be approximately EUR 35 million. The majority of the planned cost synergies are expected to be achieved through organisational streamlining, mainly within general, administrative and sales expenses (SG&A) as well as through a focusing of central administration and a combination of administration for closely located sales offices and mills. The remaining planned cost synergies are mainly expected to be reached through coordination of purchasing and production. The annual cost synergies are expected to be gradually realised over two years following completion of the combination. A more pronounced impact on the combined company\'s profitability is expected from the fourth quarter of 2017 and the cost synergies are expected to be fully realised as from the second quarter of 2019. Integration costs of approximately EUR 30 million are expected to have nonrecurring cash flow impacts from the third quarter of 2017 to the second quarter of 2018, with the majority of nonrecurring costs impacting the second and third quarters of 2017. Munksjö and Ahlstrom will inform, consult and negotiate with relevant employee organisations regarding the social, economic and legal consequences of the proposed combination in accordance with the applicable legal requirements. The combined company will continue to evaluate additional revenue and cost synergies beyond the current plan through leveraging the combined R&D platform, cross selling through the combined customer base and further coordination of production, sales and procurement. THE COMBINED COMPANY Overview The combined company will become a global leader in sustainable and innovative fiber-based solutions with preliminary combined annual net sales of approximately EUR 2.2 billion and EBITDA of EUR 249 million for the twelve months ended 30 September 2016, and approximately 6,200 employees. The combined company will have 41 production and converting facilities in 14 countries and will have leading global positions in its main product areas:
Board of Directors and Management Following consultation with the shareholders\' nomination board of each of Munksjö and Ahlstrom, the Board of Directors of Munksjö will make a proposal to the EGM of Munksjö resolving on the combination that Peter Seligson, Elisabet Salander Björklund, Sebastian Bondestam, Alexander Ehrnrooth, Hannele Jakosuo-Jansson, Mats Lindstrand and Anna Ohlsson-Leijon, current members of the Board of Directors of Munksjö, be conditionally elected to continue to serve on the Board of Directors of Munksjö following the completion of the combination and that Hans Sohlström, Jan Inborr, Johannes Gullichsen and Harri-Pekka Kaukonen, current members of the Board of Directors of Ahlstrom, be conditionally elected as members of the Board of Directors of Munksjö following the completion of the combination. The nominees have indicated that if elected they will elect Hans Sohlström as Chairman of the Board of Directors of Munksjö, and Peter Seligson and Elisabet Salander Björklund as Vice-Chairmen of the Board of Directors of Munksjö. Munksjö\'s current CEO, Jan Åström, will continue to serve as the CEO of the combined company. The management team of the combined company will also include the current CFO of Munksjö, Pia Aaltonen-Forsell, and the current CFO of Ahlstrom, Sakari Ahdekivi. |