The agreed consideration in the form of equity and assumption of net interest bearing debt is 2,645 millions Euro (NOK 21 billion) of which net interest bearing debt at January 1st 2002 is estimated to 757 million Euro, (NOK 6 billion). Norsk Hydro will in addition assume unfunded pension liabilities amounting to 450 millions Euro (NOK 3.6 billion)
Eivind Reiten, Chief Executive of Norsk Hydro, said: "This acquisition, which we consider attractively priced and is accretive to our earnings, is an important step towards realizing one of Hydro's key strategic ambitions to become one of the top performing world class aluminium companies. We have built a solid financial platform by successfully divesting non-core activities and improving earnings from our core businesses. This financial strength has enabled us to make this major strategic move. We will now focus on the challenges of rapid integrating the new units, combined with the improvement processes already underway in our existing light metals activity. VAW is a highly competent organization that will strengthen our platform for innovation and future growth".
The energy group E.ON is the present parent company of VAW, the leading aluminium company in Germany. VAW, with operations in more than 20 countries, had annual revenues of 3,7 billions Euro (NOK 28 billion) in 2000 and a workforce of 16,000. Total sales in Hydro Aluminium activities after the acquisition will be approximately 10 billion Euro, (NOK 80 billion), and the merged company will employ more than 30,000 person.
VAW's division Flexible Packaging is considered to be non-core in the future activities of Hydro Aluminium, and will be managed for value until market conditions allow for beneficial sale. This division had 2000 sales of approximately 550 millions Euro (NOK 4.4 billion) and close to 4,800 employees.
The integration of Hydro Light Metals and VAW into Hydro Aluminium will open significant synergy and value creation opportunities. Together with Hydro Light Metal's own overhead cost reduction program, this will reduce annual costs with 200 millions Euro (NOK 1.6 billion) by end of 2003. The cost reduction will lead to a reduction of manning of approximately 1,100 globally, of which one around 300 in Norway.
The combined activities will after the acquisition be named Hydro Aluminium and will be headquartered in Oslo, Norway. Jon-Harald Nilsen, executive vice president for Hydro Light Metals will be CEO of the merged Hydro Aluminium. The different business sectors will have their subheadquarters in Germany, Norway, Switzerland and USA.
Mr. Nilsen says: "By uniting the significant primary metal capacities of two companies, VAW's world class rolling system, Hydro's leadership in aluminium extrusions, and both companies' strong positions as suppliers to the automotive industries, we are creating a strong platform for growth. By broadening the total product offering and moving our business relationships even closer to end users, we will create more customer value."
The acquisition is subject to clearance by the European Union competition authorities and the approval of Norsk Hydro's corporate assembly. The estimated close of the deal is during first quarter of 2002.
We also have the pleasure of inviting to press conferences in Oslo and Düsseldorf today, January 7 at 11:
Oslo: Eivind Reiten, President and CEO of Norsk Hydro will present the deal in a press conference in Oslo, Felix Konferansesenter, Aker Brygge, at 11.00 today.
Düsseldorf: Jon-Harald Nilsen, CEO of Hydro Aluminium, will present the deal in a press conference in Düsseldorf, Steigenberger Parkhotel, Salon Dumont-Lindemann, Corneliusplatz 1, at 11.00 today.
Further information, presentations and downloads: www.hydro.com
There will be a conference call at 1600 CET (10 AM EST) by CFO Mr Leiv Nergaard. Please call +44 20 8781 0598
For additional information in Germany: Henner Meckel Norsk Hydro Deutschland GmbH Ratingen/Düsseldorf Tel: +49 21027460