Outotec Arranges Takeover of Filter Builder Larox

Finnish mineral processing and metallurgical specialist Outotec, intent upon increasing its global business through the acquisition of complementary technologies, said it has reached agreement with certain major shareholders to acquire their A and B shares of filter manufacturer Larox. The purchase price for the shares is to be paid in the form of new Outotec shares. Upon completion of the share transactions, Outotec will make a public tender offer for all the remaining Larox series A and B shares.

“Our aim to supplement the technology portfolio became achievable through this share exchange arrangement. Larox products and services fit seamlessly into Outotec’s technology portfolio. The transaction also supports our objective of profitable growth. By combining our respective sales and service networks and product portfolios we can provide even more comprehensive solutions and services for mineral concentrators and metallurgical plants, and generate more added value to our joint customer base,” said Tapani Järvinen, CEO of Outotec.

Outotec claims the combination will provide substantial benefits to the shareholders and other stakeholders of both companies in that: • Larox filtration technologies complement Outotec’s technology portfolio and enable the offering of comprehensive solutions for minerals concentrators and metallurgical plants throughout a large joint customer base. • The transaction is expected to increase Outotec’s service business by more than €70 million and enable Outotec to increase its sales of services to an annual level of €250 million to €300 million by the end of 2010. • The transaction supports Outotec’s businesses relating to industrial water treatment and the energy sector. • Larox provides Outotec access to the chemical industry market in which Outotec can offer, for example, water treatment solutions. • Combining the global sales and service networks and administration of both companies as well as economies of scale achieved by the larger size are estimated to create synergy benefits of at least €7 million annually.

The combination, according to Outotec, is not expected to have a significant effect on its earnings per share in 2010 excluding possible one-time costs related to the transaction.

Outotec said in mid-October it had reached agreement with certain members of the Vartiainen family, Capillary Oy, Ilmarinen Mutual Pension Insurance Co., Mikko Laakkonen and Laakkosen Arvopaperi Oy to sell all of their Larox series A and B shares to Outotec. The purchase price for such shares will be paid in the form of new Outotec shares. The shares to be purchased correspond altogether to 94.4% of all the votes in Larox, to 99.99% of all Larox series A shares and to 61.89% of all Larox series B shares. Completion is conditional on the receipt of necessary approvals from regulatory authorities. Based on a preliminary analysis, Outotec expects to obtain required clearances by December, at the latest.

Upon completion of the share transactions, Outotec will make a public tender offer for all series A and series B shares in Larox that are not yet owned by Outotec. As a part of the offer, Capillary Oy will make an offer to Larox to purchase the 49% share held by Larox of Larox Flowsys Oy’s share capital and that Larox Flowsys Oy wll be entitled to continue using the Larox name for an agreed period. Independent valuation of the Larox Flowsys Oy shares to be sold is currently put at approximately €3.5 million.

Outotec sells plant, processes, equipment and services to its customers worldwide. Outotec’s sales in 2008 amounted to approximately €1.2 billion and the company has approximately 2,500 employees in 21 countries. Larox filtration solutions are mainly used worldwide in the mining and metallurgical industries as well as in chemical processing. Larox sales in 2008 totaled €208 million, and it has approximately 560 employees.

As featured in Womp 2009 Vol 09 - www.womp-int.com