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Outokumpu Completes Inoxum Transaction

01/02/2013 - Outokumpu announced the completion of the Inoxum transaction. The company now hold close to 40% of the stainless steel market share in Europe and 12 globally.

Highlights:
  • Outokumpu and ThyssenKrupp AG have completed the Inoxum transaction
  • The new Outokumpu starts operations on 29 December 2012 with a new structure and leadership
  • The combination is structured to create significant annual cost synergies of €200 million on an annual basis, of which €50 million is expected already in 2013, and cumulatively up to €150 million in 2014
  • ThyssenKrupp becomes a major shareholder in Outokumpu through directed share issue, holding 29.9% of the shares
  • Outokumpu discloses pro forma results for January–September 2012
  • Guido Kerkhoff, CFO of ThyssenKrupp joins the Board of Directors
Outokumpu announced the completion of the Inoxum transaction. With close to 40% market share in Europe and 12% globally, the broadest portfolio in the industry and unparalleled technical expertise and customer knowledge, Outokumpu starts as a clear global leader in stainless steel and high performance alloys.
“The rationale for building this new industry powerhouse remains as strong as ever; optimizing our production structure, expanding both our product portfolio and market presence to growth markets in the Americas and Asia and reaching annual synergy savings of approximately €200 million,” said Mika Seitovirta, CEO of Outokumpu.
"We have the scale and expertise to bring innovation to our customers. The breadth and depth of our technical and application expertise offers customers the best possible advice in materials selection across all application areas. In addition, we will be able to offer competitive delivery times, and local service wherever the customer is,” said Seitovirta.
As of 29 December 2012 Outokumpu has four business areas — Stainless Coil EMEA, Stainless Coil Americas, Stainless APAC and High Performance Stainless & Alloys — that provide the full range of stainless steel as well as high performance alloys. New Outokumpu will also benefit from its own chrome mine and the related ferrochrome production, which bring the company a significant cost advantage over other stainless manufacturers.
The combined entity has approximately 16,900 employees, combined revenues of €9.6 billion euros (2011 pro forma) and annual cold rolling capacity of approximately 2.8 million tons.
The new Outokumpu Leadership Team consists of
  • Mika Seitovirta, CEO
  • Esa Lager, CFO
  • Ulrich Albrecht-Früh, president, Stainless Coil EMEA
  • Kari Parvento, president, Stainless Coil Americas
  • Jarmo Tonteri, president, High Performance Stainless and Alloys
  • Austin Lu, president, Stainless APAC
  • Reinhard Florey, EVP, strategy and integration
  • Kari Tuutti, EVP, marketing, communications and IR
  • Johann Steiner, EVP, human resources (appointed)
Pii Kotilainen continues in pro tem role as EVP, human resources and member of the Outokumpu leadership team until Steiner starts in his new role.
The transaction enables a strategic optimization of production capacities, production locations and supply routes. In addition, transaction enables savings in procurement, logistics, sales, IT and in support functions.
“We recognize the challenges we face, and we are determined to take the necessary steps to reach sustainable profitability. Of the approximately €200 million annual synergy savings we seek €50 million already in 2013 and the level of €150 million by the end of 2014, and we get them from planned mill closures, higher utilization rates, economies of scale in raw material purchasing, and streamlining of sales, service centers, IT and other general costs. Reaching these significant synergy savings is something neither company could have achieved alone,” concludes Seitovirta.
In order to achieve the targeted efficiency increases, the combined entity plans to reduce its melting capacity by approximately 1.4 million tons. In accordance with the agreement announced on 31 January 2012 among Outokumpu, ThyssenKrupp and the German labor representatives, the Krefeld meltshop will be shut down by the end of 2013 and it is envisaged that the meltshop in Bochum will be closed by the end of 2016, pending a final review of its financial performance in 2015. Furthermore, Outokumpu considers a reduction of thin cold rolling capacity in Sweden from 2014 onwards. 
The overall global restructuring efforts are expected to result in a reduction of up to 2,000 jobs during next four years. These measures will strengthen the combined entity's financial profile and, in turn, provide greater job security in the future. All changes will be conducted in a socially responsible manner whilst limiting impact on customers.
Based on the authorization by an extraordinary general meeting of shareholders on 1 March 2012, as part of the transaction consideration for Inoxum, the Board of Directors has resolved to issue 621,042,572 new shares of Outokumpu to ThyssenKrupp, which represents 29.9% of the outstanding shares of Outokumpu following the completion of the directed share issue.
The new shares were expected to be registered with the Finnish Trade Register on 31 December 2012. Public trading in the new shares together with the existing shares is expected to commence on official list of NASDAQ OMX Helsinki Ltd on 3 January 2013. The new shares carry a right to dividend and other shareholder rights as from their registration with the Finnish Trade Register.
As decided by the Annual General Meeting in March 2012, following the completion of the transaction, Guido Kerkhoff, CFO at ThyssenKrupp, started as member in the Outokumpu Board of Directors and in the Remuneration Committee of the Board on 29 December 2012. Guido Kerkhoff will also represent ThyssenKrupp in the Shareholders’ Nomination Board as of the same date.