Tag Archives: Neles

Alfa Laval targets industrial flow control market with Neles bid

Less than two weeks into being a public entity, Neles has become the subject of a friendly takeover offer from Alfa Laval AB.

The two have entered into a combination agreement pursuant to which Alfa Laval will make a voluntary recommended public cash tender offer for all issued and outstanding shares in Neles that are not held by Neles or any of its subsidiaries, the two companies said.

The €11.50/share ($13/share) all-cash bid values Neles at around €1.7 billion, which is a 32.8% premium to the closing Neles share price on July 10.

Alfa Laval, a leading global provider of products and solutions based on its key technologies of heat transfer, separation and fluid handling, has identified the industrial flow control market as a key growth area, it said. The planned transaction enables it to considerably strengthen its presence in the large industrial flow control space where the company currently offers mainly energy efficiency solutions, they said.

“On the other hand, Alfa Laval believes there are several areas where being part of the Alfa Laval Group can make a significant contribution to the future development of Neles, such as leveraging Alfa Laval’s existing global platform,” it said.

Some of Alfa Laval’s products are used in the engineering sector, mining industry and refinery sector, treating wastewater and in creating a comfortable indoor climate.

Neles, which began trading on the Helsinki Stock Exchange on July 1 as part of Metso’s partial demerger and merger with Outotec, is a global leader in flow control solutions and services. The company’s valves and valve automation technologies are known for quality, reliability and highest safety, it says.

The members of the Board of Directors of Neles who participated in the decision-making process have unanimously decided to recommend the shareholders of Neles accept the tender offer, while Cevian Capital, which holds some 10.9% of the issued and outstanding shares in Neles, has on customary conditions irrevocably undertaken to accept the offer.

Alfa Laval will on or about August 13, 2020, publish a tender offer document with detailed information about the tender offer and information on how to accept it. The offer period is expected to commence on or about this date and to expire on or about October 22, 2020, unless the offer period is extended by Alfa Laval.

“Neles and Alfa Laval would create a larger and stronger global player in the flow control market,” they said. “As a combined company, Neles would become an integral part of Alfa Laval’s organisation structure while largely retaining its operational structure and strong identity within the Alfa Laval network.”

The combined company’s combined revenue for the 12 months ended March 31, 2020, was approximately SEK53.8 billion ($5.9 billion) and it had a combined total of some 20,300 employees globally on March 31, 2020.

“The transaction is expected to be earnings per share accretive for Alfa Laval beginning from the first year following the completion of the tender offer,” they said.

There are several areas where being part of the Alfa Laval Group can make a significant contribution to the future development of Neles, Alfa Laval says, with certain strategic opportunities including:

  • Leveraging Alfa Laval’s service network infrastructure of around 100 service centres globally;
  • Leveraging Alfa Laval’s automated warehouse presence in North America, Europe, and Asia in Neles’ global parts distribution. The set-up is well suited to Neles’ product range and can provide a world-class solution in the industrial flow market, it says; and
  • Acquisition growth: Alfa Laval has a long history of successful M&A transactions and the financial strength to support a meaningful acquisition program in the industrial flow market.

Commenting on the offer, Tom Erixon, President and CEO of Alfa Laval, said: “The proposed deal offers a strong industrial logic: our businesses complement each other well with very little overlapping operations. Alfa Laval has the resources to invest in and support the development of Neles for years to come, while our global service network offers Neles a ‘plug and play’-kind of platform. As an owner, Alfa Laval would be committed to the strategy and industrial plan of Neles while offering a powerful platform to enable future growth. The match is nearly perfect.”

Olli Isotalo, President and CEO of Neles, said: “We see this offer as clear evidence of the good, strong work done throughout the years. It means that Alfa Laval believes in and appreciates our strategy, products and, most of all, know-how of our people. We continue to be serving our customers and executing our strategy and are delighted to hear that Alfa Laval would support our endeavours.”

Neles aims for environmentally friendly valve production with new tech centre

Neles, the valves focused spin off of Metso, has announced the start-up of operations at its new valve technology centre in Jiaxing, China.

The new plant strengthens Neles’ valve and related products production capabilities and increases availability for customers across various process industries, in China and globally, it said.

This is the first major announcement from the company since it became a new entity with the partial demerger of Metso (into Neles) and the merger of Metso and Outotec to become Metso Outotec.

The greenfield investment in China to respond to the growing demand of reliable valve technologies was announced back in October 2018.

Olli Isotalo, President and CEO of Neles, said: “This is an important strategic addition to Neles’ global manufacturing footprint and good news for our valve customers around the world. With this investment, our target is to further improve our service and delivery capabilities to meet the diverse and evolving needs of our customers.”

Jiaxing’s manufacturing layout is designed with the latest technologies for efficient and environmentally friendly mass production of high-volume standard valve products, Neles said.

Kevin Tinsley, Head of Valve Operations at Neles, said the principle has been to ensure the most reliable and emission-free production processes from the new plant.

“For example, the liquid recycling system at Jiaxing allows reusing 95% of the liquids used in machining or testing processes and thus minimising formation of hazardous substances,” he said.

“Also, the Regenerative Thermal Oxidizer in use allows as much as 99% organic compound free painting process.”

The new plant will produce over 100,000 valves per year, according to the company.

“With access to a variety of competitive logistic options, the products from Jiaxing can be shipped to customers or Neles supply centres around the globe with dramatically improved lead times,” it added.

In addition to Jiaxing, Neles’ valve technology centre in China in the Waigaoqiao Free Trade Zone in Shanghai continues operations, focusing on highly engineered products.

Neles employs around 400 flow control specialists at four main locations in China, serving all process industries.

Isotalo concluded: “China is an extremely important market for our business. The new technology centre will have a key role in strengthening our R&D capability in China as well as our global footprint and position as a leading provider of reliable flow control solutions.”

Today, Neles has valve technology or production centres around the world in North America, Germany, Finland, South Korea, Saudi Arabia and India.

Metso breaks records as it looks forward to more growth

It was a record year in terms of profitability for Metso in 2019; a year that saw the minerals processing company make several strategic decisions to fundamentally change its group structure.

Orders received across the group increased 5% to €3.7 billion ($4.1 billion), with sales growing 15% to €3.635 billion. Adjusted EBITA rose from €369 million in 2018 to €474 million (13% of sales) in 2019, while operating profit jumped to €418 million from €351 million.

Metso President and CEO, Pekka Vauramo, said 2019 was in many ways historical and transformational for the company.

“It also marked a record in our financial performance, as our sales increased in both segments and our profitability was higher than ever in the company’s history,” he said.

The company also launched some major new products – including the Metso Truck Body and the VPX filter – in addition to publishing the Metso Climate Program, which aims for notable reductions in emissions.

The year will be remembered for two major strategic decisions from Metso.

“The first was the acquisition of McCloskey, a Canadian supplier of mobile aggregates crushers and screens,” Vauramo said. “After the closing of the acquisition in October, Metso’s offering strengthened in the mobile aggregates equipment market, which is estimated to see the industry’s fastest-growing demand.”

“The second and truly transformative step was the decision related to the partial demerger of Metso, after which Metso’s Minerals business will be combined with Outotec to create Metso Outotec, a unique company in the minerals, metals and aggregates industries,” Vauramo said.

At the same time as this, the company took the decision to allow its valves business to continue as an independent listed company named Neles.

Vauramo said: “We are confident that, as a result of this transaction, both companies will be well-positioned to grow and create value for our customers and other stakeholders.”

Shareholders of both Metso and Outotec approved the transaction in October at respective meetings and internal preparations have proceeded according to plan, Vauramo said.

The completion of the transaction still requires approvals from the competition authorities in various markets, but according to the company’s estimate, closing should take place on June 30, 2020.

Metso and Outotec tie-up wins backing at EGM

Metso says its Extraordinary General Meeting (EGM) has seen the Board of Directors’ partial demerger plan and combination with Outotec approved.

The decisions of the EGM will become effective as of the registration of the completion of the partial demerger, which is expected to take place in the June quarter of 2020, subject to the statutory creditor hearing process and receipt of all required regulatory and other approvals, including competition clearances.

The combination of Metso Minerals and Outotec is highly complementary and will create a unique company in the industry, according to the two companies. “Metso Outotec will leverage the strengths of both companies, including technology and R&D, product and process excellence, scale and global service offering footprint. The combination will deliver significant benefits to all stakeholders,” they said.

As part of the deal, Metso Flow Control, which was recently split off from the Metso Minerals division, will become a pure-play listed entity under the name of Neles.

Pursuant to the demerger plan, all such assets, rights, debts and liabilities of Metso which relate to, or primarily serve, Metso’s Minerals business will transfer, without liquidation of Metso, to Outotec.

The planned combination received approval from the Finnish Financial Supervisory Authority earlier this month.

Metso and Outotec to join together in ‘industry-shaping combination’

The boards of Metso and Outotec have unanimously approved a demerger plan and a combination agreement to combine Metso’s Minerals business with Outotec.

As part of the deal, Metso Flow Control, which was recently split off from the Metso Minerals division, will become a pure-play listed entity under the name of Neles.

The combination of Metso Minerals and Outotec is highly complementary and will create a unique company in the industry, according to the two companies. “Metso Outotec will leverage the strengths of both companies, including technology and R&D, product and process excellence, scale and global service offering footprint. The combination will deliver significant benefits to all stakeholders,” they said.

The combined company, Metso Outotec Corp, had illustrative 2018 combined sales and adjusted EBITA of €3.9 billion ($4.4 billion) and €369 million (excluding the impact of the €110 million provision recorded in relation to the ilmenite smelter project as described in Outotec’s 2018 financial statements).

This represents an illustrative combined adjusted EBITA margin of 9.6% in 2018, excluding the benefit of the expected synergies, and also Metso’s recently announced acquisition of McCloskey International. Including McCloskey, illustrative 2018 combined sales would have been approximately €4.2 billion.

Metso Minerals and Outotec expect to achieve run-rate annual pre-tax cost synergies of at least €100 million, and run-rate annual revenue synergies of at least €150 million, delivering significant value for shareholders, they said.

Upon completion of the agreed demerger, Metso shareholders will receive 4.3 newly-issued shares in Outotec for each share owned in Metso on the record date. This implies Metso shareholders would own around 78% of the shares and votes of Metso Outotec, and Outotec shareholders would own the remaining 22% of the shares and votes of Metso Outotec. In addition, Metso shareholders will retain their current shares in Metso, which will be renamed Neles.

The current CEO of Metso, Pekka Vauramo, will become Metso Outotec’s CEO, and the current CEO of Outotec, Markku Teräsvasara, will become the Deputy CEO of Metso Outotec. Eeva Sipilä will become the CFO and Deputy CEO of Metso Outotec.

The board of Metso Outotec will include board members from both companies. It is proposed that Metso Outotec’s Chairman will be Mikael Lilius and that the Vice Chairman will be Matti Alahuhta.

Shareholders representing 33.6% of the shares and votes of Metso and shareholders representing 24.8% of the shares and votes of Outotec have irrevocably undertaken to vote in favour of the transaction, which the companies hope will close in the June quarter of 2020.

Metso Outotec’s headquarters will be in Helsinki, Finland and it will maintain its listing on Nasdaq Helsinki, the companies said.

Outotec Chairman, Matti Alahuhta, called the deal an “industry-shaping combination” that joins two “uniquely complementary companies”, while Metso Chairman, Mikael Lilius, said the deal represented a “transformational combination of two great companies” and the simultaneous creation of an “independent leader in flow control”.

Outotec CEO, Markku Teräsvasara, said: “The combination of Outotec and Metso marks an important milestone in each company’s history and in Outotec’s strategic development. I am excited about the many benefits that the combination will deliver for customers, employees and ultimately shareholders, with the larger scale and combined strengths of both companies. Outotec has a highly compelling portfolio of technologies and capabilities that will be a key catalyst for unlocking many of these benefits. I look forward to building a great new company together with the Outotec and Metso Minerals employees, as part of Metso Outotec.”

And, Metso CEO, Pekka Vauramo, said: “This is a unique opportunity to create value for our customers, employees and partners globally. Metso Outotec will have capabilities that will enable us to drive sustainable growth, while providing our customers with high-quality technology, equipment and services that will ultimately improve their businesses. We will have an extensive global presence, complementary offering, strong services and a large installed base. We also have excellent people – the best talent in the industry. I am therefore eagerly waiting to join with Outotec’s personnel to begin our exciting journey together.”

The combination of the two companies is, according to Metso and Outotec, expected to deliver a range of strategic, commercial, operational and financial benefits:

  • A leading company with a wide presence across the value chain allowing Metso Outotec to provide an end-to-end offering in minerals processing;
  • Enlarged installed base coupled with advanced service offering providing opportunities to unlock significant benefits;
  • Leadership in sustainable technology across all businesses;
  • Breadth across verticals (minerals/metals/aggregates), geography and application provide enhanced performance;
  • Significant revenue and cost synergies, and;
  • Solid capital structure and attractive dividend policy.

The companies said: “The combination of Metso Minerals and Outotec will create a leading company in process technology, equipment and services serving the minerals, metals and aggregates industries. Metso Outotec will also have expertise in specialist areas, such as recycling and energy solutions.”

Metso Outotec will have a presence across the full minerals processing and metals refining value chain, with a “differentiated ability to deliver end-to-end solutions across the whole process from crushing to end products”, they said. The combined company will own a broad portfolio of leading technologies in, for example, comminution, beneficiation and metals refining, as well as a market leading aggregates business and global strength in services.

On a combined basis, Metso Minerals and Outotec had 15,630 employees globally, as of March 31, 2019, with close to 100 nationalities represented.

Completion of the transaction is subject to approval by a majority of two-thirds of votes cast and shares represented at the respective EGMs of Metso and Outotec, regulatory approvals, including competition clearances, and other conditions.

As a result of the combination of Metso Minerals and Outotec, Metso will be renamed as Neles and will become a globally recognised flow control company with highly attractive market positions.

Neles, which will continue to be listed on Nasdaq Helsinki, is expected to create additional value for Metso’s shareholders as a separate entity through:

  • Leading position as a flow control solution provider with market leadership across pulp & paper valves and down stream oil & gas control valves;
  • Continued outperformance of market growth with best-in-class profitability and proven resilience through the cycle;
  • Diversified sales mix both by region and industry;
  • A fully focused, dedicated management to deliver shareholder value and leverage further growth opportunities;
  • Solid balance sheet and financial position, and;
  • Crystallisation of attractive sector trading multiples.

At year-end 2018, Neles had illustrative combined net cash of €72 million. To support the capital structure of Neles, Metso has entered into a €150 million term loan facility agreement, which may be used for the repayment and replacement of Metso’s credit facilities and other liabilities that benefit the flow control business and are to remain with Neles post completion. Prior to the completion, Metso is also expected to enter into a new revolving credit facility of €200 million to be used for the general corporate purposes of Neles.

Olli Isotalo, who was named the new CEO of the Flow Control division last month, will become Neles’ CEO.

Metso Flow Control highlights mining and mineral processing valve expertise

Metso’s industry-leading crushing and grinding technology status is well known throughout the mining world, but its valves expertise is, perhaps, not as familiar.

Complementing both the minerals processing and pump technology the group produces, Metso has been engineering valve solutions for over 90 years. One of the group milestones was the establishment of Neles Oy in 1956, with a focus on Finland’s pulp & paper sector flow control solutions.

Neles®has since become a household name across multiple industries, famous for premium engineered metal-seated valve solutions. The company also acquired the Jamesbury® business some decades ago to add a premium-performance soft-seated valve solution to the portfolio.

Ville Kähkönen, Director, Industry Management, Metso Flow Control, told IM on site at the company’s Hakkila facility, close to Helsinki-Vantaa airport, Finland, that there is a clear distinction between the two product families.

“Jamesbury valves are used in temperatures below 260°C,” he said, adding that the Neles metal-seated valves are the best choice for higher temperatures or when the process media includes abrasive fluids and solids like sand.

Touring the facility and hearing from Kähkönen and Heikki Kärki, Industry Manager, Mining & Minerals Processing, Metso Flow Control, IM discovered just how many of these valves have found their way to mining operations around the globe.

The company manufactures not only the valves, but also the actuators and smart controllers; a fact that sets it apart from many of its competitors supplying just one or two of these elements.

On average, in a minerals processing plant, there can be around 10,000 valve installations across an operation each serving a specific purpose, according to Kärki.

He told IM it is not only Metso knife-gate valves – used for isolation purposes in the mill circuit – that are found in the separation and refinery stages of mining operations; the company provides several types of valve solutions that can be tailor made to the specific application.

This wide-ranging expertise is reinforced by a quick scan of the number of valve installations Metso has carried out over 2000-2018. During this period, the company’s supplied base has covered all but one continent (Antarctica the exception), with applications across what it terms “slurry, utility and severe services”.

In addition to being one of the few companies able to supply the complete valve assembly, including the valve, the actuator and the intelligent valve controller, Metso is rare in having the capability to custom-engineer valves for the harsh, abrasive and acidic conditions that come with autoclave processing. This is a field that has been growing in the nickel, copper and gold space in recent years, Kähkönen said. Standard valves last a matter of weeks in these applications – where pressures can exceed 30 bars, temperatures can exceed 200°C and concentrations can be highly acidic.

A materials technology team with decades of experience, plus an on-going relationship with an autoclave manufacturer, has enabled the company to come up with valve solutions offering a robust coating specifically designed to outlast other solutions in the autoclave market.

The company was also keen to highlight its digitalisation capabilities within the valves space during the visit.

Metso launched its first NP™ series pneumatic positioner already fifty years ago. A digital valve controller – the Neles ND9000 – was introduced by Metso all the way back in 1995 and, since the launch of this product, the company has established smart controllers that collect data to be analysed by Metso’s in-house team or the client themselves, the latest being its Neles NDX® controller.

These controllers have gained such a reputation that other valve manufacturers regularly acquire them to complement their own valve solutions.

Hakkila, which focuses on the Neles engineered valves and intelligent positioners, is one of several Metso valve technology centres worldwide. Its Shrewsbury factory, in Massachusetts, in the US, caters to demand for the Jamesbury valves, while its Horgau, Germany, facility specialises in high performance Neles butterfly valves.

Chungju, in South Korea, looks after Neles globe valves, and its two plants in the Mumbai area, India, concentrate on Jamesbury EasyFlow valves and Neles scotch yoke actuators manufacturing for the India and global markets.

On top of this, it has a second US facility in Minnesota (Fergus Falls), a service and supply centre in Brazil (Sorocaba), a technology hub in Shanghai, China, which manufactures standard Neles and Jamesbury products globally and provides service in the region, and a technology centre in Jiaxing, China, set to open next year.

Annually, Metso delivers around 400 000 valves to different process industries. Additionally, Metso completes over 20,000 valve overhauls and 3,000 site visits. It also carries out over 250 major planned valve shutdowns a year – an element that is important to ensure valves keep working for as long as possible.

And, the company has recently enhanced its valves manufacturing process with the ability to use 3D printing in certain valve components. This is a process offering previously unavailable engineering options that can, for example, improve some of the design features and decrease the weight of valve components.