Energy and aluminium company Norsk Hydro ASA has entered into an agreement to
sell its Rolling business to KPS Capital Partners for EUR 1,380 million on an
enterprise value basis. A major step on Hydro's agenda to improve profitability
and drive sustainability.
The transaction includes seven plants, one R&D center, global sales offices, and
around 5,000 employees of which 650 employees in Norway and the remaining mainly
in Germany.
"Hydro launched a strategic review of our Rolling business area in 2019, along
with other strategic measures towards profitability and sustainability. We have
now concluded, and our Rolling business will continue its development under new
ownership. This is a good solution for both Hydro and for the employees in
Rolling, who will continue their efforts and continued growth in a new,
dedicated downstream company," says Hydro President and CEO Hilde Merete
Aasheim.
"Hydro's ambition is to lift profitability and drive sustainability, creating
value for all stakeholders. The sale of Rolling will strengthen our ability to
deliver on our strategy, strengthening our position in low-carbon aluminium,
while exploring new growth in areas where our capabilities match global
megatrends," says Aasheim.
In 2020, Hydro Rolling contributed approximately NOK 24 billion in revenue, 17%
of Hydro total and NOK 1.3 billion in Underlying EBITDA, 9% of Hydro total. The
sales amounted to 864,000 tonnes, serving segments including Can, Foil,
Lithography, Automotive and General Engineering.
In addition to delivering on Hydro's strategic ambitions, the sale will assist
in strengthening the balance sheet.
KPS Capital Partners is a well-regarded and operationally focused global private
equity firm, with a history of holding significant interests in metals and
automotive enterprises. KPS Capital Partners is aligned with Hydro on having
safety as a first priority on the agenda and is well positioned to execute on
improvements identified in the strategic review of Rolling. They also have
established relationship and Framework Agreements with the German unions IG
Metall and IG BCE.
"KPS is enthusiastic about the opportunity to further develop Rolling to its
full potential, including providing the resources necessary to execute a
business transformation. We have spent three months closely analyzing the
business in the customary detailed due diligence, have been highly impressed
with the Rolling management team, and look forward to partnering with them and
the entire Rolling team to invest in and grow the business," says Michael
Psaros, Co-Founder and Co-Managing Partner of KPS Capital Partners.
The agreed transaction price of EUR 1,380 million will result in a reduction of
EUR 856 million in pension liabilities and EUR 435 million cash proceeds. The
transaction is subject to customary approvals from competition authorities and
is expected to be completed during second half of 2021. Executive Vice President
and Head of Hydro Rolling, Einar Glomnes, will become CEO of the new company
after closing.
The Rolling operations will be treated as an asset held for sale and
discontinued operations in Hydro's financial reporting from the first quarter of
2021. The valuation indicates an impairment of EUR 160 - 190 million, which will
be included in the annual financial statements for 2020.
President & CEO, Hilde Merete Aasheim, will present the transaction by an audio
webcast and a conference call, in English, at 09:00 CET today, Friday 5 March.
The referred measures EBIT, EBITDA, Underlying EBIT and Underlying EBITDA
represent alternative performance measures (APMs). Hydro's definitions and use
of IPMs is described in the section Alternative performance measures (APMs) in
the fourth quarter 2020 report. This section also includes a description of
items excluded from underlying EBIT and underlying EBITDA. EBIT and EBITDA are
also segment measures, disclosed in note 2 Operating segment information in
Hydro's fourth quarter 2020 report.
Hydro Rolling
MNOK, 2020
Hydro Total Rolling % Rolling
-------------------------------------------------
Revenue 138,118 23,903 17.3 %
EBITDA 19,465 1,132 5.8 %
uEBITDA 14,316 1,267 8.9 %
-------------------------------------------------
Contact details:
Investor contact:
Line Haugetraa
+47 41406376
Media contact:
Halvor Molland
+47 92979797
The information is such that Hydro is required to disclose in accordance with
the EU Market Abuse Regulation. The information was submitted for publication
from Hydro Investor Relations and the contact persons set out above.
Certain statements included in this announcement contain forward-looking
information, including, without limitation, information relating to (a)
forecasts, projections and estimates, (b) statements of Hydro management
concerning plans, objectives and strategies, such as planned expansions,
investments, divestments, curtailments or other projects, (c) targeted
production volumes and costs, capacities or rates, start-up costs, cost
reductions and profit objectives, (d) various expectations about future
developments in Hydro's markets, particularly prices, supply and demand and
competition, (e) results of operations, (f) margins, (g) growth rates, (h) risk
management, and (i) qualified statements such as "expected", "scheduled",
"targeted", "planned", "proposed", "intended" or similar. Although we believe
that the expectations reflected in such forward-looking statements are
reasonable, these forward-looking statements are based on a number of
assumptions and forecasts that, by their nature, involve risk and uncertainty.
Various factors could cause our actual results to differ materially from those
projected in a forward-looking statement or affect the extent to which a
particular projection is realized. Factors that could cause these differences
include, but are not limited to: our continued ability to reposition and
restructure our upstream and downstream businesses; changes in availability and
cost of energy and raw materials; global supply and demand for aluminium and
aluminium products; world economic growth, including rates of inflation and
industrial production; changes in the relative value of currencies and the value
of commodity contracts; trends in Hydro's key markets and competition; and
legislative, regulatory and political factors. No assurance can be given that
such expectations will prove to have been correct. Hydro disclaims any
obligation to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
This information is subject to the disclosure requirements pursuant to Section
5-12 the Norwegian Securities Trading Act