Neles announced on July 2, 2021 the signing of a combination agreement (the "Combination Agreement") with Valmet Corporation ("Valmet") and the proposed combination of Neles and Valmet's business operations through a statutory absorption merger of Neles into Valmet pursuant to Chapter 16 of the Finnish Companies Act whereby all assets and liabilities of Neles would be transferred without a liquidation procedure to Valmet (the "Merger"). As a consequence of the completion of the Merger, Neles would be dissolved and automatically cease to exist as a separate legal entity. The shareholders of Neles would receive new shares in Valmet as merger consideration in proportion to their shareholding in Neles upon completion of the Merger.
The purpose of the Merger is to create a leading company with a unique, competitive and balanced total offering for process industries globally, with strong positions in its respective segments including paper, board, pulp and energy technologies, flow control, automation systems and services. The combined company's business is expected to benefit from diversified product platforms, end markets and customers with relevant scale in key markets and an ideal positioning to benefit from the strong sustainability focus in the combined company’s end markets through megatrends such as energy transition and increasing demand for renewables.
Reference is made to the public announcement on the Merger dated July 2, 2021 for further information about its rationale and details.
In order to complete the Merger, the Board of Directors of Neles proposes that the Extraordinary General Meeting would resolve on the statutory absorption merger of Neles into Valmet in accordance with the merger plan approved by the Boards of Directors of Valmet and Neles dated July 2, 2021 and thereafter registered with the trade register maintained by the Finnish Patent and Registration Office on July 9, 2021 (the "Merger Plan").
Shareholders holding in aggregate approximately 15.4 percent of the shares and votes in Neles, including Cevian Capital Partners Limited, Ilmarinen Mutual Pension Insurance Company, Elo Mutual Pension Insurance Company and Varma Mutual Pension Insurance Company, have subject to certain customary conditions irrevocably undertaken to attend the Extraordinary General Meeting and to vote in favor of the Board of Directors' proposals regarding the Merger and the dividend authorization set out in this agenda item and agenda item 7 below. In addition, Valmet which holds approximately 29.54 percent of the shares and votes in Neles has undertaken to vote in favor of these resolutions.
Resolution on the Merger
Pursuant to the Merger Plan, Neles would be merged into Valmet through an absorption merger, so that all assets and liabilities of Neles would be transferred without a liquidation procedure to Valmet in a manner described in more detail in the Merger Plan.
The Board of Directors of Neles proposes that the Extraordinary General Meeting resolves on the Merger of Neles into Valmet in accordance with the Merger Plan and approves the Merger Plan. The general meeting can only approve or reject the proposed Merger in accordance with the Merger Plan but cannot alter it.
Pursuant to the Merger Plan, the shareholders of Neles shall receive as merger consideration 0.3277 new shares of Valmet for each share they hold in Neles (the “Merger Consideration”). In case the number of shares received by a shareholder of Neles as Merger Consideration (per each individual book-entry account) is a fractional number, the fractions shall be rounded down to the nearest whole number. Fractional entitlements to new shares of Valmet shall be aggregated and sold in public trading on Nasdaq Helsinki Ltd and the proceeds shall be distributed to shareholders of Neles entitled to receive such fractional entitlements in proportion to their holding of such fractional entitlements. Any costs related to the sale and distribution of fractional entitlements shall be born by Valmet.
The final total number of shares in Valmet to be issued as Merger Consideration shall be determined on the basis of the number of shares in Neles held by shareholders of Neles, other than Neles itself and Valmet, at the end of the day preceding the execution of the Merger. Such total number of shares to be issued as Merger Consideration shall be rounded down to the nearest full share.
Based on the number of issued and outstanding shares in Neles on the date of this notice, a total of 34,664,986 new shares in Valmet would be issued to shareholders of Neles as Merger Consideration. This would correspond to approximately 18.8 percent ownership in Valmet for Neles’ shareholders and approximately 81.2 percent ownership in Valmet for Valmet’s shareholders after the Merger.
A shareholder of Neles, who votes against the Merger in the Extraordinary General Meeting, has the right as referred to in Chapter 16, Section 13 of the Finnish Companies Act to demand redemption of his/her/its shares at the Extraordinary General Meeting.
Resolution to authorize the Board of Directors to resolve upon an extra distribution of funds
Based on the Combination Agreement between Neles and Valmet, Neles may at any time prior to the execution of the Merger distribute to its shareholders an extra distribution of funds in the amount of up to EUR 2.00 per share either as dividend or return of equity from the Company's fund for invested unrestricted equity or a combination of the two.
In order to enable the above-mentioned extra distribution of funds, the Company's Board of Directors proposes to the Extraordinary General Meeting that the Extraordinary General Meeting would authorize the Board of Directors to resolve, before the completion of the Merger, on a distribution of funds not exceeding EUR 2.00 per share to be paid either as dividend from the Company's retained earnings or return of equity from the Company's fund for invested unrestricted equity or a combination of the two.
The authorization would be in force until the opening of the next Annual General Meeting of the Company.
The Company will separately publish its Board of Directors' resolution to distribute funds based on the authorization and will simultaneously confirm the applicable record and payment dates. Funds paid on the basis of the authorization will be paid to shareholders who are registered as shareholders in the Company's shareholders' register on the record date of the distribution of funds.