Outokumpu Submits a Binding Remedy Commitment Related to the Inoxum Transaction
10/09/2012 - After the rejection of the Swedish remedy by the European Commission, Outokumpu has now submitted a binding remedy commitment to ensure the approval of the Inoxum transaction.
Following the European Commission’s demand for an industrial remedy related to the Inoxum transaction, Outokumpu submitted two alternative remedy proposals, announced on 20 September and 1 October 2012. After the rejection of the Swedish remedy by the European Commission, Outokumpu has now submitted a binding remedy commitment to ensure the approval of the Inoxum transaction.
As a binding remedy Outokumpu commits to the divestiture of the Inoxum stainless steel mill in Terni, Italy, and select European service centers. The set of remedies excludes a bright annealing production line in Terni with an annual capacity of 130,000 tonnes, which is to be transferred to an Outokumpu production site prior to the divestment. In addition, the divestiture commitment does not include the tubular unit in Italy, Tubificio di Terni.
This binding remedy commitment means that the Swedish stainless units in Avesta, Nyby and Kloster included in the original remedy proposal will not be divested as a remedy and will continue operations within Outokumpu.
“The strategic importance of the Inoxum transaction remains unchanged,” says Mika Seitovirta, Outokumpu CEO. “Through this transaction we will have a full stainless steel and high performance alloys product portfolio. With a cost-efficient production structure and strengthened presence in all key regions we will be in an excellent position to serve our customers in the best possible way.”
Outokumpu expects the Inoxum transaction to result in significant synergy savings. Despite the divestiture of the Terni operations, the company estimates to reach annual synergy savings of approximately 200 million euros. Outokumpu will now begin the detailed industrial planning to ensure an optimal production structure for the new company, taking the divestiture of Terni into account. At this stage, company has no plans to change the planned closures of the meltshops in Krefeld and Bochum, Germany, that have been communicated earlier.
The combination of Outokumpu and Inoxum will create a new global leader in stainless steel. In addition to the synergy savings, the transaction carries a significant growth upside in North America through a new integrated stainless steel mill in Calvert, Alabama, and strengthens the combined company’s market position in Asia. Further, the Inoxum transaction diversifies Outokumpu’s customer base with consumer driven industry segments, and complements the product offering to cover all stainless steel grades as well as high performance alloys products.
The European Commission is expected the make their decision regarding the Inoxum transaction by 16 November 2012. Outokumpu remains fully committed to the Inoxum transaction and targets to finalize it by the end of 2012.
