Finland’s Metso rejects Weir Group’s $5.5-bn merger proposal
16 Apr 2014
Metso Oyj, the Finland-based engineering company, today rejected an all-share merger proposal from Scottish pump and drilling equipment maker Weir Group.
''The board of directors of Metso has carefully evaluated the proposal received from Weir and has come to the unanimous conclusion that this proposal is not in the best interest of
Metso shareholders,'' said Metso in a release.
''The Metso board remains extremely positive and confident in Metso's standalone growth and value creation prospects by pursuing its current strategy. As a consequence, the board has rejected Weir's proposal and sees no reason to commence discussions regarding a potential combination,'' the release added.
Early this month, Glasgow-based Weir, which has recently gone on an acquisition spree, tabled an unsolicited all-share merger offer to Metso without disclosing the price that is speculated to be at around 10 per cent premium to Metso's late last month share price, valuing the Helsinki-based company at more than £3.3 billion ($5.5 billion).
Under the deal, Metso shareholders would hold 37 per cent of the new company.
The combined company would have a market cap of around $14.8 billion and annual sales of $9.3 billion.
Kari Jarvinen, managing director of Finland's state investment fund Solidium, which owns 11 per cent of Metso, had earlier said that Metso has a bright future as an independent company.
''I don't think this is the right time to sell Metso to Weir Group, or to sell it to anyone,'' said Jarvinen.
Other major shareholder of Metso is Swedish activist investor Cebian Capital, whose co-founder Christer Gardell is on Metso's board.
Founded in 1999 through the merger of Valmet, a paper and board machine supplier, and Rauma, which focused on fibre technology, rock crushing and flow control solutions, Metso is a supplier of technology, automation and services to the mining, construction, and oil & gas industries.
In 2013, Metso split into two companies, Metso Corporation's Mining and Construction business and Automation business formed the new Metso Corporation and Metso's Pulp, Paper and Power business formed a new independent company under the name Valmet Corporation.
Metso has around 16,000 employees and reported net profit of $429.8 million in 2013 on sales of $5.3 billion.
Founded in 1871, Weir, an FTSE 100 company, is a global provider of engineering solutions to the minerals, oil and gas and power sectors.
With a global network of more than 140 manufacturing facilities and service centres, its customers include the world's largest mining houses, major oil services businesses and nuclear and conventional power generation companies.
In 2013, the company reported revenues of more than £2.43 billion and profit before tax of £418 million. It has net debt of £747 million.
A Metso deal would have the latest in a series of acquisitions done by Weir recently.
In 2010, it acquired Malaysian mining services group Linatex, and acquired the Rs1.52-crore valves business of Karnataka-based privately-owned BDK Engineering Industries Limited.
