Outokumpu and Thyssenkrupp to combine their stainless steel businesses

The Board of Directors of Finnish based Stainless steel company Outokumpu has approved the proposed combination of Outokumpu and Inoxum, the stainless steel unit of Germany’s ThyssenKrupp. The transaction is designed to create a new global leader in stainless steel under the operational leadership of Outokumpu. The transaction values Inoxum at an enterprise value of EUR 2.7 billion based on Outokumpu's share price of EUR 7.36 as of close on 30 January 2012. "This is a truly transformational deal," said Mika Seitovirta, CEO of Outokumpu. "We are forming a new global leader in stainless steel, and are creating added value for our customers and shareholders. Outokumpu and Inoxum are an excellent fit - we are combining two highly complementary businesses to create tremendous synergy potential that neither company could realise on its own," explained the Outokumpu CEO. "Outokumpu will be an efficient, innovative and reliable partner for its customers, and will offer enhanced stability and attractive development prospects to its employees," Seitovirta continued.

"I am very pleased with this strategic transaction as it unlocks significant shareholder value. I have full confidence in the management team of the combined business to drive Outokumpu's growth in the global stainless steel industry," said Ole Johansson, Chairman of the Board of Outokumpu.

The combination of Outokumpu and Inoxum will create a new global leader in stainless steel with a complementary and innovative product offering across key customer segments. As of 30 September 2011, the combined entity would have had annualised sales of EUR11.8 billion, approximately 19,000 employees, global market share of approximately 14 percent and annual cold rolling capacity of approximately 3.5 million tons.

Following completion of the transaction, Outokumpu is expected to have the scale and financial strength to take advantage of a range of global growth opportunities. These opportunities include an expansion in the Americas enabled by the state-of-the-art and cost-effective Calvert, US production facility that is scheduled to be fully commissioned in December 2012 with a 1Mt meltshop and a 350kt cold rolling mill. The transaction will also allow Outokumpu to expand its existing presence in China, one of the fastest-growing regions in the stainless steel industry. At the same time, Outokumpu will continue the upstream integration at Tornio, Finland, doubling its in-house production of ferrochrome by 2015, which is expected to provide a considerable profit opportunity for the combined business.

“Combination of Outokumpu and Inoxum are highly complementary in terms of product offering. Outokumpu is a leader in high value added austenitic and duplex grades. In addition to austenitic grades, Inoxum is a leader in ferritic grades and a leading supplier of sophisticated high performance alloy products. This, coupled with its extensive network of local service centres, will enable the combined entity to supply a broad product offering with shorter delivery times and customised solutions for its customers globally. In addition, it will provide a strong diversification across different grades reducing volatility from any temporary shifts in demand between grades,” said Yatinder Pal singh Suri, India head of Outokumpu

“ The strategic partnership up will also help in faster delivery company’s products in India Following completion of the transaction, Outokumpu will also have a global and well-balanced customer base, covering key end-user segments. Outokumpu is an established supplier to capital goods industries, while Inoxum is a leading supplier to more consumer-driven segments such as the white goods, catering and automotive industries. This well-balanced customer base provides the combined entity with reduced exposure to volatility of individual industries going forward,” he added.