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Valmet and Neles announce merger plans

| By Mary Bailey

Valmet Oyj (Espoo, Finland) and Neles Corp. (Helsinki, Finland) announce that their respective Boards of Directors have today signed a combination agreement and a merger plan to combine the two companies through a merger.

The Combined Company will be a leading company with a unique offering for process industries globally with illustrative combined net sales for 2020 of approximately EUR 4.3 billion. In addition, it will have a globally balanced expert organization of approximately 17,000 professionals.

The Combined Company expects to have growth potential in all current businesses and in new emerging sectors supported by favorable megatrends. It will also have enhanced growth opportunities across automation and flow control serving a range of various process industries with a strong sustainability focus. The Combined Company will benefit from broader revenue and cost synergies anchored in the strong industrial logic of combining flow control and automation systems.

The combination is expected to generate annual run-rate synergies of approximately EUR 25 million of which approximately 60 percent are expected to be achieved by 2023 and approximately 90 percent by 2024. Total one-off implementation costs related to synergies are expected to be approximately EUR 25 million.

The proposed combination will be implemented as a statutory absorption merger whereby Neles will be merged into Valmet. The completion is expected to occur on or about January 1, 2022, subject to all conditions for completion being fulfilled.

Pasi Laine will continue to act as the President and CEO of the Combined Company after the completion of the merger.

Valmet Chairman, Mr. Mikael Mäkinen, said: “The combination of Valmet and Neles will create a broad and competitive product offering for our customers and build on the excellent reputation of both of our businesses. The transaction creates a global industrial leader with a bright future beyond what we could achieve separately. Together our businesses are better positioned to drive innovation and leadership in sustainability.”

.The Combined Company will benefit from an extensive offering of process technologies, services, flow control and automation systems. The business will have strong market positions in core segments. Together, Valmet and Neles will be better positioned to drive innovation and enhance leadership in sustainability. In addition, the business is expected to benefit from significant cost and revenue synergies driven by:

Revenue synergies from improved combined sales to pulp & paper customers, cross-selling to the energy and process industry customers, a more comprehensive service offering and an extended service network;

New offering development synergies from improved process automation technology development as well as remote monitoring and predictive maintenance offering development; and

Cost synergies from e.g. enhanced efficiencies in global and country-driven functions, common locations and cost savings from combining functions relating to operating as a listed company.

The combination is expected to generate annual run-rate synergies of approximately EUR 25 million of which approximately 60 percent are expected to be achieved by 2023 and approximately 90 percent by 2024. Total one-off implementation costs related to synergies are expected to be approximately EUR 25 million. Together, these are expected to create a platform for significant value enhancement for the shareholders of Valmet and Neles.

Together, the companies have approximately 17,000 employees with a global footprint of 54 production units, 23 R&D centers and approximately 140 service centers.

The Combined Company is expected to have strong market positions in its respective segments including paper, board, pulp and energy technologies, flow control, automation systems and services.

The Combined Company will continue to be listed on Nasdaq Helsinki Ltd and the name of the company will remain Valmet Oyj.