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Outokumpu to Acquire Italian Stainless Steel Distributor SoGePar

04/28/2008 - Outokumpu will acquire the SoGePar Group, an Italian distributor of stainless steel, for EUR 195 million in cash and the assumption of EUR 140 million in company debt.

Outokumpu has signed an agreement to acquire the SoGePar Group, an Italian distributor of stainless steel from its current owners, the Borromeo family for EUR 195 million in cash and the assumption of EUR 140 million in company debt.
 
SoGePar operates stainless steel service centers in Castelleone in Italy and in Rotherham in the U.K., as well as stock operations in Italy, the U.K., Belgium, Finland, France, and Ireland. The company also has a commercial office in Germany and a representative office in Turkey. Sales of the SoGePar Group in 2007 amounted to EUR 560 million, operating profit to EUR 44 million and deliveries to 134 000 tonnes.
 
“This transaction enables Outokumpu to better serve its customers through the expanded service center network, expand its customer base and positively develop end-user and project sales which in turn should bring more stability,” said Deputy CEO Karri Kaitue. “The acquisition is a determined step toward Outokumpu’s strategic ambition of building a more stable and profitable business model for the Group.”
 
Outokumpu’s acquisition of SoGePar will significantly strengthen the company’s position in stainless steel distribution in Italy, which, together with Germany, is Europe’s largest market for stainless steel.
 
“We believe that this transaction gives significant new opportunities for us and our customers as we become a part of a strong and integrated stainless steel group,” said Vitaliano Borromeo, the Managing Director of SoGePar Group. “Outokumpu’s high technological know-how and expertise in special grades are an added attraction.”
 
The SoGePar operations will eventually be integrated with Outokumpu’s service center network, with the current SoGePar operational management continuing in their posts. The SoGePar operations will allow Outokumpu to avoid the previously announced EUR 70 million investment to expand its current stock and processing operations in Italy.
 
Following completion of the acquisition, Outokumpu’s Stock & Processing capacity in Italy and the U.K. will be in excess of 240 000 tonnes. In total, with the SoGePar acquisition and the service center investments announced recently, Outokumpu’s global annual stock and processing capacity will increase from the current 300,000 tonnes to in excess of 740,000 tonnes by 2010.
 
SUMMA Corporate Finance is a financial advisor of Outokumpu in the transaction. The transaction is expected to be completed by the end of the second quarter after regulatory clearances and satisfaction of other customary closing conditions.