LAROX OYJ COMPANY ANNOUNCEMENT 28.12.2009 2:00 pm
Statement by the Board of Directors of Larox concerning Outotec's tender offer
With reference to the company announcement published by Outotec Oyj on December
22, 2009 regarding the Outotec Oyj's mandatory public tender offer, the Board of
Directors of Larox Oyj issues the following statement in accordance to the
chapter 6, section 6 of the Finnish Securities Markets Act regarding the public
tender offer of Outotec Oyj.
THE STATEMENT BY THE BOARD OF DIRECTORS OF LAROX OYJ IN ACCORDANCE TO THE
CHAPTER 6, SECTION 6 OF THE FINNISH SECURITIES MARKETS ACT REGARDING THE
MANDATORY PUBLIC OFFER OF OUTOTEC OYJ
1. Background
Outotec Oyj (“Outotec” or the “Offeror”), has offered to acquire through a
mandatory public tender offer in accordance with Chapter 6 of the Finnish
Securities Market Act (495/1989, as amended) all of the series A and B shares
issued by Larox Corporation (“Larox”), which are not yet in the ownership of
Outotec or which Larox does not own as well as the unused subscription rights
relating to the bonus issue implemented by Larox in 1994 (the “Subscription
Rights”) (the “Tender Offer”).
Outotec announced on December 18, 2009 that it will carry out with certain main
shareholders of Larox share transactions, in which the aforementioned will sell
all Larox series A and B shares held by them to Outotec (the “Share
Transactions”). The shares purchased correspond altogether to 94.40% of all the
votes in Larox and 99.99% of all Larox series A shares, to 61.89% of all Larox
series B shares and 70.48% of all the shares in Larox. The Share Transactions
were completed on December 21, 2009, as a consequence of which Outotec has
become obliged to make a mandatory public tender offer for all the remaining
series A and B shares of Larox as well as for the Subscription Rights.
According to the Outotec's announcement the consideration offered for each
series A and series B share in the Tender Offer equals to the consideration
offered in
the Share Transactions, i.e. 0.45 new Outotec shares for each series A share and
0.40 new Outotec shares for each series B share (the “Share Consideration”). A
cash consideration of EUR 10.76 for each series A share and of EUR 9.56 for
each series B share is offered as an alternative in the Tender Offer (the “Cash
Consideration”). (The Cash Consideration and the Share Consideration jointly
referred to as the “Offer Consideration”). The Offer Consideration for each
Larox
series B share represents a premium of approximately 36.6% compared to the
closing price of the Larox series B share on the Helsinki Stock Exchange on
October 14, 2009, which was the last trading day before the announcement of the
Share Transactions and the Tender Offer, and a premium of approximately 41.8%
compared to the volume-weighted average trading price of the Larox series B
share during the last six (6) months before the announcement of the Share
Transactions and the Tender Offer. The Larox series A shares are not subject to
public trading. The consideration offered for each Subscription Right is EUR
11.47 in cash (the “Subscription Right Offer Price”).
Under Chapter 18 (624/2006, with amendments) of the Finnish Companies Act, a
shareholder holding more than 90% of the total number of the shares and votes in
a company has the right and also obligation if other shareholders so demand to
redeem the remaining shares issued by the company. According to the Tender
Offer, if Outotec acquires ownership to more than 90% of the Larox shares,
Outotec intends to initiate compulsory acquisition proceedings under the above
provisions of the Finnish Companies Act in order to acquire title to all the
Larox shares. In any other event, Outotec may consider alternative means of
combining the businesses of the companies, such as by means of a merger or other
business arrangements.
It is Outotec's intention that, as promptly as possible according to the
applicable rules, Larox shall apply for the delisting of its shares from the
official list of the Helsinki Stock Exchange.
The acceptance period for the Tender Offer (the “Offer Period”) has commenced on
December 28, 2009 at 9:30 am (Finnish time) and expires on January 22, 2009 at
4:00 pm (Finnish time) unless the Offer Period is extended.
The above-mentioned Tender Offer and its conditions are described in details in
the Tender Offer Document.
2. Statement of the Board of Directors
The Board of Directors of Larox (“Board”) has today, in accordance to the
chapter 6, section 6 of the Finnish Securities Markets Act, issued this
statement regarding the Tender Offer (“Statement”). The Statement evaluates the
Tender Offer from the point of view of the holders of the Larox Shares and
Subscription Rights targeted by the Tender Offer, the strategic plans presented
by Outotec in the Tender Offer Document and their probable impact on Larox's
business and employment at Larox.
More detailed background of the Tender Offer is available in the Tender Offer
Document.
The Board has issued this statement in a composition which includes the
following independent members of the Board: Thomas Franck, Teppo Taberman and
Matti Ruotsala. The members of the Board Timo Vartiainen and Katariina Aaltonen
who have already sold the shares owned by themselves and by Capillary Oy to
Outotec have not, due to possible conflict of interest, participated and will
not participate in the decisions of the Board or in the formulation of the
Statement on this issue.
The Board has evaluated the Tender Offer and its terms on the basis of the
Tender Offer Document, the fairness opinion acquired from Evli Bank Plc,
Corporate Finance, and other information that has been available.
Outotec has presented its stratetic plans in the Tender Offer Document. Outotec
aims at combining the businesses of Outotec and Larox. The Board states that
Outotec and Larox operate within the same industry, and service mainly a common
customer base. The Board also states that the risks related to the activity of
Outotec and Larox are highly similar and future outlook compatible.
The Board evaluates that Larox's filtration technology and related aftermarket
business complete Outotec's product and service range. According to the Board's
view the strategic plans presented by Outotec are in line with Larox's strategy,
the goals being profitable growth, technology leadership as a solution provider
for mining, metallurgy and chemical process industries and increase of the
service business.
The Board evaluates that combining Outotec's and Larox's businesses will have a
positive impact on the development of the Larox's product and service range
globally and on the strengthening of the market position under tightening
competition.
The Board states that Outotec has evaluated that combining the global sales and
service networks and administration of both companies as well as economies of
scale achieved by the larger size will create synergy benefits of at least EUR 7
million annually. According to the Tender Offer Document Outotec estimates that
the combination will have a clearly positive effect on Outotec's earning per
share when the synergies materialize in 2011.
The Board states that Outotec admits in the Tender Offer Document that combining
Outotec's and Larox's businesses will, in addition to synergy benefits, pose
challenges to both parties, and the combination may, as is common in such
processes, involve unforeseeable risks.
In connection with the completed Share Transactions, Capillary Oy has made an
offer to Larox according to which Capillary Oy is willing to purchase the 49%
share of Larox Flowsys Oy's share capital held by Larox. Based on the statement
given by an external independent expert the value of the Larox Flowsys Oy shares
subject to the acquisition equaled, on December 10, 2009, the price offered by
Capillary Oy which is 3.5 million euros. The Board evaluates that the price
offered by Capillary Oy is appropriate.
According to the Tender Offer Document Outotec aims at achieving cost savings by
combining the business of both companies. The management of Outotec has in
November 2009 launched the planning of a new structure and business model.
Outotec's aim is to implement the new structure and business model in spring
2010. The potential effects of Outotec's contemplated new business model on
Larox' business, assets or the position of Larox' management and employees will
be known only once the plans have been finalized and resolutions regarding
actions to be undertaken have been taken. The Board states that Larox continues
the formerly agreed and ongoing structural adjustment measures independently of
the outcome of the Tender Offer.
The shareholders should take into account the risks related to non acceptance of
the Tender Offer. The Larox shares held by a Larox shareholder who has not
accepted the Tender Offer may, on conditions set out in the Finnish Companies
Act, be redeemed in the minority shareholders acquisition proceedings under the
Finnish Companies Act. The value of the potential cash consideration received
through such acquisition proceedings may, depending on the development of the
Outotec share price, also be lower than the value of the Share Consideration
offered in the Tender Offer. The acceptance of the Tender Offer reduces the
number of Larox shareholders and the number of such Larox shares, which would
otherwise be publicly traded. Depending on the number of the Larox shares
tendered in the Tender Offer, this could have an adverse effect on the liquidity
and value of the Larox share.
3. The Recommendation of the Board
On the basis of the information included in the Tender Offer Document and the
fairness opinion acquired from Evli Bank Plc, Corporate Finance and other
available information the Board estimates that Outotec's Offer is according to
the interest of Larox and of the holders of the Larox's Shares and Subscription
Rights.
The Board states that the value of the Share Consideration for each series B
share equaled the value of the Cash Consideration, based on the Outotec share
value according to the closing price on December 23, 2009, which was 23.90
euros. The Share Consideration may vary during and after the period of the
tender offer and its value may be above or below the Cash Consideration.
The Board recommends unanimously that the shareholders of Larox accept the
Tender Offer.
The Board states that it has not participated in the negotiations on the Share
Transactions nor drawn any combination contract with Outotec or made any due
diligence investigation at Outotec.
The Board has not actively been looking for alternative or competing tender
offers.
The Board has not either received alternative or competing offers or been
informed of any such offer being under preparation.
The Board reminds that this statement of the Board is not investment or taxation
advisory in nature. Each shareholder has to acknowledge with the Tender Offer
Document including the terms of the Tender Offer and the information concerning
the Offerer, and decide independently whether to accept or not to accept the
Tender Offer, and if accepting the Tender Offer, choose between the Share
Consideration and the Cash Consideration.
Larox Oyj
The Board of Directors
Further information:
Teppo Taberman, Member of the Board
Telephone +358 40 504 7400
Distribution NASDAQ OMX Helsinki Ltd., Central Media
Larox develops, designs and manufactures industrial filters and is a leading
technology company in its field. Larox is a full service solution provider in
filtration for separating solids from liquids. It supplies comprehensive
aftermarket services throughout the lifespan of the Larox solution. Companies
world-wide in mining and metallurgy, chemical processing and related industries
benefit from the Larox technologies. Larox operates in over 40 countries and
has about 600 employees. Larox has production facilities in Finland and in
China, and the Group is headquartered in Lappeenranta, Finland. Net sales in
2008 totaled 208.0 million euros, of which more than 93 % were generated by
exports and the company's foreign operations.