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Valmet acquires 14.9% ownership in the future Neles

Valmet has agreed to acquire 22,374,869 shares in the future Neles Corporation from Solidium Oy, representing 14.88% of all Neles' shares and votes. The transaction between Valmet and Solidium is expected to take place on July 1, 2020.

Neles Corporation is planned to be created in the partial demerger of Metso, in which Metso's Flow Control business would become the independent Neles Corporation and would continue Metso's listing on Nasdaq Helsinki. The completion of the partial demerger is currently expected to take place on June 30, 2020 (pending final merger control approvals).

After the partial demerger, Neles will be an independent globally leading diversified valve, valve automation and service company with net sales in 2019 amounting to EUR 660 million and adjusted EBITA margin to 14.6%. Neles' headquarters are located in Vantaa, Finland and the company has operations in more than 40 countries worldwide with approximately 2,900 employees.

Approximately 70% of Neles' net sales is recurring business. Neles' business is well diversified across process industries and regions, with 26% of net sales coming from the pulp and paper industry. Since 2011, Neles' orders received have grown by approximately 5% annually and the profitability has improved.

Comment from Pasi Laine, President and CEO of Valmet
"Neles is a good quality global company with a large share of recurring business and a strong position in the pulp and paper industry. It has demonstrated good growth and has potential to grow further.

We have today agreed to acquire a minority share in Neles and our target is to increase our ownership when Neles' share price supports additional purchases. Valmet's goal is to have an active long-term role in the development of Neles.

The strategic rationale of the share acquisition is further supported by the fact that Valmet and Neles have a common heritage, serve similar global industries and benefit from same global megatrends."

Transaction details
The agreed purchase price is EUR 8.00 per share, corresponding to a total transaction value of EUR 179 million at the signing, paid 100% in cash. The price will be adjusted based on Neles' share price development during certain limited time period after the completion of the partial demerger of Metso. The possible adjustment is paid or received by Valmet in cash. The adjustment agreed is customary and capped, and will not have a material impact on the transaction value.

The agreement includes a one-year lock-up period, during which Valmet may not dispose its shares in Neles without Solidium's approval. Solidium retains the right of first refusal for a period of three years after the closing. In addition, the agreement includes an anti-embarrassment clause, according to which Solidium could be entitled to an additional cash payment in certain circumstances where Valmet would acquire or dispose shares in Neles at a higher price during a three year period after the closing.

Valmet will finance the share acquisition with a new loan facility.


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