Metsäliitto is paying E240m in cash for the shares, and M-real will book a capital gain of approximately E135m from the transaction.
“The sale of Metsä-Botnia shares to Metsäliitto is part of M-real’s restructuring programme that was announced on 18 October 2006,” says Mikko Helander, CEO of M-real.
“The transaction will enable us to proceed swiftly with the restructuring programme. The other options could have significantly delayed the programme because of the competition authorities’ approvals and contractual negotiations. The sale will significantly strengthen M-real’s balance sheet and financial position. It will have a positive impact of about 20 percentage points on M-real’s gearing,” says Helander.
UPM-Kymmene had announced announced an offer to buy Metsä-Botnia shares owned by M-real on November 9 last year.
The UPM offer concerned 15 per cent of the shares of Metsäliitto Group subsidiary, Metsä-Botnia, and included a premium for control, because acceptance of the offer would have given control of Metsä-Botnia to UPM.
Members of M-real’s board of directors who are independent of the parent company, Metsäliitto, evaluated the offers and considered that it would be in the interest of the company and all its shareholders to accept the offer from Metsäliitto. M-real’s board of directors based its decision on the committee’s proposal.
“It was difficult to compare the offers on the same basis, because the offers concerned different numbers of Metsä-Botnia shares and UPM’s offer involved a premium for control,” says Kim Gran, president and CEO of Nokian Tyres, who chaired the independent committee.
“From M-real’s point of view, approval of UPM’s offer would have resulted in significant operational and strategic problems and uncertainty factors.
“The transfer of control to a competitor would have led to a problematic situation, particularly with regard to M-real’s mills in Kaskinen, Kemi, Joutseno and Äänekoski, as these mills are integrated with Metsä-Botnia’s production plants.
“UPM’s offer involved considerable legal uncertainties as well – particularly from the point of view of competition law. Correspondence with UPM also shows that approval of their offer would have required changing the agreements that guide Metsä-Botnia’s operations, and this was not possible,” concludes Gran.
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