Notice convening the Extraordinary General Meeting

Notice convening the Extraordinary General Meeting

Valmet Oyj's stock exchange release on August 9, 2021 at 2:00 p.m. EET

Notice is given to the shareholders of Valmet Oyj (“Valmet” or the “Company”) of the Extraordinary General Meeting (the “General Meeting”) to be held on Wednesday, September 22, 2021 at 2:00 p.m. (Finnish time) at Hall 101 of Messukeskus Helsinki, Messuaukio 1, 00520 Helsinki, Finland. The reception of persons who have registered for the meeting and the distribution of voting tickets will commence at 13.30 p.m. (Finnish time).

In order to reduce the risk of infection resulting from the coronavirus (COVID-19) situation, Valmet will seek to keep the General Meeting as short as possible and to limit the number of participants. The participation of the members of the Company’s Board of Directors and Executive Team will be kept to a minimum.

For the same reason, the Company respectfully requests that its shareholders give serious consideration to whether it is necessary for them to participate in the General Meeting at the meeting venue in person or represented by a representative other than the proxy representative designated by the Company. Shareholders are advised to primarily follow the General Meeting online via webcast and to vote in advance or to participate in the meeting by way of proxy representation arranged by the Company. Shareholders also have a possibility to submit questions concerning matters on the agenda of the General Meeting in advance. The Company will, at the latest by August 20, 2021, provide shareholders, on the Company’s website at www.valmet.com/egm, with a pre-recorded presentation in which the management of the Company present the proposed merger of Neles into Valmet. The presentation is not a part of the General Meeting and will be in English with Finnish subtitles. The above alternatives are described in more detail in section C of this notice below.

No catering will be arranged in connection with the meeting.

Valmet is actively monitoring the development of the coronavirus situation and follows the instructions given by authorities. Any changes to the meeting arrangements that may be caused by the situation will be announced on the Company’s website at www.valmet.com/egm.

A.   Matters on the agenda of the General Meeting

At the General Meeting, the following matters will be considered:

1. Opening of the meeting
2. Calling the meeting to order
3. Election of persons to scrutinize the minutes and to supervise the counting of votes
4. Recording the legality of the meeting
5. Recording the attendance at the meeting and adoption of the list of votes
6. Resolution on the merger

Introduction

Valmet announced on July 2, 2021 the signing of a combination agreement (the “Combination Agreement”) with Neles Corporation (“Neles”) and 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 (624/2006, as amended) (the “Finnish Companies Act”) whereby all assets and liabilities of Neles are transferred without a liquidation procedure to Valmet (the “Merger”). As a consequence of the completion of the Merger, Neles will be dissolved and automatically cease to exist as a separate legal entity. The shareholders of Neles will receive new shares in Valmet as merger consideration in proportion to their shareholding in Neles at the end of the day preceding the execution 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 Valmet proposes that the General Meeting resolves 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 (the “Finnish Trade Register”) on July 9, 2021 (the “Merger Plan”), and as part of approval of the Merger, and as further set out below:

1. approve the amended Articles of Association of Valmet in the form appended to the Merger Plan;
2. resolve on the issuance of new shares of Valmet as merger consideration to the shareholders of Neles;
3. resolve on the increase of the share capital of Valmet;
4. resolve on the number of the members of the Board of Directors of Valmet;
5. resolve on the election of the members of the Board of Directors of Valmet;
6. resolve on the remuneration of the Board of Directors of Valmet; and
7. resolve on the temporary deviation from Charter of Shareholders’ Nomination Board.

The Merger as a whole and the resolutions of items (i)-(vii) above are conditional upon and will become effective upon the registration of the execution of the Merger with the Finnish Trade Register. The planned date of registration of the execution of the Merger is January 1, 2022. The planned date of registration of the execution may change as set out in the Merger Plan.

The proposed resolutions form an entirety that requires the adoption of all its individual items (including items (i)-(vii)) by a single resolution. The General Meeting can only approve or reject the proposed resolutions but not amend them.

Shareholders holding in aggregate approximately 16.9 percent of the outstanding shares and votes carried by the outstanding shares in Valmet, including Solidium Oy, 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 General Meeting and to vote in favor of the Board of Directors’ proposals regarding the Merger.

Resolution on the Merger

Pursuant to the Merger Plan, Neles shall be merged into Valmet through a statutory absorption merger, so that all assets and liabilities of Neles shall be transferred without a liquidation procedure to Valmet in a manner described in more detail in the Merger Plan.

The Board of Directors of Valmet proposes that the General Meeting resolves on the Merger of Neles into Valmet in accordance with the Merger Plan and approves the Merger Plan. In addition to the other matters described in the Merger Plan, the resolution on the Merger includes the following key matters as specified in the Merger Plan:

1. 1. Amendment of the Articles of Association

The Board of Directors of Valmet proposes to the General Meeting that the Articles of Association of Valmet be amended in accordance with the Merger Plan, conditionally upon the completion of the Merger, as follows:

1. 1. 1. Article 2, which concerns the Company’s line of business, shall be amended to better reflect the business of the combined company.
      2. Article 6, which concerns the Company’s accounting period, shall be amended so that the reference to the first accounting period is removed.
      3. Article 7, which concerns auditing, shall be amended so that the terminology be changed to reflect currently valid legislation.
      4. Article 8, which concerns the notice convening a general meeting, shall be amended to concern also the place of general meetings of shareholders so that general meetings of shareholders may be held in Helsinki, Espoo or Vantaa.
      5. Article 9, which concerns the Annual General Meeting of shareholders, shall be amended so that the terminology be changed to reflect currently valid legislation and a clarification be made to the provision concerning the voting procedure.

The amended Articles of Association of Valmet have been appended in their entirety to the Merger Plan.

The amendments will enter into force in connection with the registration of the execution of the Merger.

1. 2. Merger consideration

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 borne 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.

The final total amount of Merger Consideration may be affected by, among others, any change concerning the number of shares issued by and outstanding in Neles or held by Neles as treasury shares, e.g., Neles transferring existing treasury shares in accordance with existing share-based incentive plans, prior to the date of registration of the execution of the Merger with the Finnish Trade Register (the "Effective Date").

1. 3. Increase of share capital

Pursuant to the Merger Plan, it is proposed that the share capital of Valmet shall be increased by EUR 40,000,000, in connection with the registration of the execution of the Merger.

1. 4. Number of members of the Board of Directors

Pursuant to the Merger Plan, it is proposed that the number of members of the Board of Directors of Valmet, including the Chairman and Vice Chairman of the Board of Directors, shall be eight (8).

1. 5. Composition of the Board of Directors

Pursuant to the Merger Plan, it is proposed that Aaro Cantell, Pekka Kemppainen, Monika Maurer, Eriikka Söderström and Per Lindberg, each a current member of the Board of Directors of Valmet, be conditionally elected to continue to serve on the Board of Directors of Valmet, and that Anu Hämäläinen, a current member of the Board of Directors of Neles, be conditionally elected as a new member of the Board of Directors of Valmet, that Mikael Mäkinen, current Chairman of the Board of Directors of Valmet, be conditionally elected as Chairman of the Board of Directors of Valmet and that Jaakko Eskola, current Chairman of the Board of Directors of Neles, be conditionally elected as Vice Chairman of the Board of Directors of Valmet, each for the term commencing on the Effective Date and expiring at the end of the first Annual General Meeting of Valmet following the Effective Date.

The Board member nominees have given their consent to the election. Information concerning the new Board nominees will be available on Valmet’s website at www.valmet.com/egm.

The term of the currently serving members of the Board of Directors not conditionally elected to continue in the Board of Directors of Valmet for the term commencing on the Effective Date shall end on the Effective Date.

1. 6. Remuneration of members of the Board of Directors

Pursuant to the Merger Plan, it is proposed that in line with the resolutions on Board remuneration made by the Annual General Meeting of Valmet held on March 23, 2021, the members of the Board of Directors of Valmet to be conditionally elected for the term commencing on the Effective Date and expiring at the end of the first Annual General Meeting of Valmet following the Effective Date be paid annual fees as follows:

• • • • EUR 118,000 for the Chairman of the Board;
      • EUR 70,000 for the Vice Chairman of the Board; and
      • EUR 56,000 for a Board member.

Pursuant to the Merger Plan, it is further proposed that in line with the resolutions of the Annual General Meeting of Valmet held on March 23, 2021, a base fee of EUR 7,000 shall be paid for each member of the Audit Committee, EUR 14,000 for the Chairman of the Audit Committee, EUR 4,000 for each member of the Remuneration and HR Committee, and EUR 6,000 for the Chairman of the Remuneration and HR Committee.

In addition, it is proposed that in line with the resolutions of the Annual General Meeting of Valmet held on March 23, 2021, the new members of the Board of Directors be paid a meeting fee of EUR 750 per meeting in addition to the fixed annual fee for those members whose place of residence is in Nordic countries, EUR 1,500 for those members whose place of residence is elsewhere in Europe and EUR 3,000 for those members whose place of residence is outside of Europe for the Board meetings attended, including the meetings of the committees of the Board of Directors.

For meetings in which a Board member participates via remote connection, including the meetings of the committees of the Board of Directors, it is proposed that a meeting fee of EUR 750 shall be paid to Board members. It is further proposed that a meeting fee of EUR 1,500 shall be paid to Board members for a Board travel meeting.

The annual remuneration of the new Board members elected hereunder shall be paid in proportion to the length of their term in office.

Otherwise, the resolutions on Board remuneration made by the Annual General Meeting of Valmet held on March 23, 2021 shall remain in force unaffected.

1. 7. Temporary deviation from Charter of Shareholders’ Nomination Board

Pursuant to the Merger Plan, it is proposed that a temporary deviation is made from the Charter of Shareholders’ Nomination Board to the effect that the composition of the Shareholders' Nomination Board will be amended after the Effective Date and the right to nominate representatives to the Shareholders’ Nomination Board following the Effective Date shall be vested with the shareholders having the largest share of the votes represented by all the shares in Valmet on the first business day following the Effective Date, provided that the Effective Date occurs no less than four (4) months prior to the planned date of the next Annual General Meeting of Valmet.

7. Closing of the meeting

B.   Documents of the General Meeting

The Merger Plan, proposals for the resolutions on the matters on the agenda of the General Meeting as well as this notice are available on Valmet’s website at www.valmet.com/egm. Other documents, which according to the Finnish Companies Act shall be kept available for the shareholders, will be available on the above-mentioned website as of August 20, 2021 at the latest. The proposals for resolutions and the other above-mentioned documents will also be available at the General Meeting. Copies of these documents and of this notice will be sent to shareholders upon request. Valmet jointly with Neles will in addition prepare a Finnish language prospectus and an English language translation of the prospectus which will be published before the General Meeting.

The minutes of the General Meeting will be available on the above-mentioned website as of October 6, 2021 at the latest.

C.   Instructions for the participants in the General Meeting

1. Shareholders registered in the shareholders’ register

Each shareholder who is registered on the record date of the General Meeting September 10, 2021 in the shareholders’ register of the Company held by Euroclear Finland Oy has the right to participate in the General Meeting. A shareholder whose shares are registered on his/her personal Finnish book-entry account is registered in the shareholders’ register of the Company.

A shareholder who is registered in the shareholders’ register of the Company and who wants to participate in the General Meeting, shall register for the meeting no later than on September 16, 2021 at 4 p.m. (Finnish time) by giving a prior notice of participation. The notice must be received by the Company before the end of the registration period. Registration for the General Meeting starts on August 13, 2021 at 10 a.m (Finnish time):

1. through the Company’s website at the address www.valmet.com/egm; or
2. by sending a written notification to the address Valmet Oyj, EGM / Anne Grahn-Löytänen, P.O. Box 11, FI-02151 Espoo, Finland.

In connection with the registration, a shareholder must state his/her name, personal identification number or business identity code, address, telephone number and the name of a possible assistant, proxy representative or statutory representative and the personal identification number of the proxy representative or statutory representative. When using the proxy representative designated by the Company a shareholder shall notify the identification code for such representative instead of the personal identification number as further instructed in the proxy document referred to in section C.3. below. In addition, a shareholder is requested to confirm whether he/she intends to participate in the meeting at the meeting venue in person or by representative other than the proxy representative designated by the Company. The personal data given to Valmet by shareholders is used only in connection with the General Meeting and with the processing of related registrations.

The shareholder, his/her authorized representative or proxy representative shall, if necessary, be able to prove his/her identity and/or right of representation at the General Meeting.

2. Holders of nominee registered shares

A holder of nominee registered shares has the right to participate in the General Meeting by virtue of such shares based on which he/she on the General Meeting record date September 10, 2021 would be entitled to be registered in the shareholders’ register held by Euroclear Finland Oy. The right to participate in the General Meeting requires, in addition, that the shareholder on the basis of such shares has been temporarily registered into the shareholders’ register held by Euroclear Finland Oy at the latest by September 17, 2021 at 10 a.m. (Finnish time). As regards nominee registered shares, this constitutes due registration for the General Meeting. Changes in shareholding after the General Meeting record date affect neither the right to participate in the General Meeting nor the shareholders’ number of votes.

A holder of nominee registered shares is advised to request without delay the necessary instructions regarding registration in the temporary shareholders’ register, the issuing of proxy documents and registration in the General Meeting from his/her custodian bank.

The account management organization of the custodian bank shall register a holder of the nominee registered shares, who wants to participate in the General Meeting, into the temporary shareholders’ register of the Company at the latest by the time stated above.

3. Proxy representative and powers of attorney

A shareholder who has registered for the meeting may participate in and exercise his/her rights at the General Meeting by way of proxy representation.

Due to the prevailing coronavirus situation and in order to reduce the risk of infection, shareholders are advised to primarily participate in the meeting by way of proxy representation arranged by the Company as set out in this section C. 3. or by voting in advance as set out in section C. 4. below.

A shareholder can use the proxy service provided by the Company free of charge and authorize a proxy representative designated by the Company to represent the shareholder in the meeting in accordance with the shareholder’s voting instructions. The proxy representative designated by the Company is attorney-at-law Jon Termonen from Hannes Snellman Attorneys Ltd or a person appointed by him. Detailed instructions for using the proxy service provided by the Company together with the proxy document including voting instructions will be available on the Company’s website www.valmet.com/egm at the latest by August 13, 2021. Further information about the designated proxy representative is available at https://www.hannessnellman.com/people/all/jon-termonen/.

A shareholder may also authorize another proxy representative. The proxy representative is required to produce a dated proxy document or otherwise in a reliable manner demonstrate his/her right to represent the shareholder.

If a shareholder participates in the General Meeting by means of several proxy representatives representing the shareholder with shares held at different securities accounts, the shares by which each proxy representative represents the shareholder shall be identified in connection with the registration for the General Meeting.

Possible proxy documents should be notified in connection with registration, and they are requested to be delivered completed and signed by email to the address anne.grahn-loytanen@valmet.com before the end of the registration period. A proxy representative must be prepared to present the proxy document also at the meeting venue.

4. Advance voting

Due to the prevailing coronavirus situation and in order to reduce the risk of infection, shareholders are advised to participate in the meeting by way of proxy representation arranged by the Company as set out in section C. 3. above or by voting in advance as set out in this section C. 4.

A shareholder who has a Finnish book-entry account may vote in advance on certain items on the agenda of the General Meeting during the time period from August 13, 2021 at 10 a.m. (Finnish time) until September 16, 2021 at 4 p.m (Finnish time).

Unless a shareholder voting in advance will be present in the General Meeting in person or by way of proxy representation, the shareholder may not be able to exercise his/her right under the Finnish Companies Act to request information or a vote and if decision proposals regarding certain agenda items have changed after the beginning of the advance voting period, his/her possibility to vote on such item may be restricted.

Advance voting can take place:

1. through the Company’s website at the address www.valmet.com/egm

If the shareholder is an individual, advance voting via the Company’s website requires strong electronic authentication with a Finnish bank ID or Finnish mobile certificate. Shareholders who are legal persons can vote in advance via the Company’s website by using their business ID and book-entry account number.

2. By email or mail

Shareholders may send the advance voting form available on the Company’s website or corresponding information to Euroclear Finland Oy by email to the address yhtiokokous@euroclear.eu or by mail to the address Euroclear Finland Oy, Yhtiökokous / Valmet Oyj, P.O. Box 1110, FI-00101 Helsinki, Finland.

If a shareholder participates in the General Meeting by submitting advance votes to Euroclear Finland Oy, the submission of the advance votes before the end of the registration and advance voting period constitutes registration for the meeting, provided that the information required for registration and advance voting listed below has been given.

In connection with the advance voting, the requested information, such as the shareholder’s name, personal identification number or business identity code, address and telephone number and the name of a possible proxy representative or statutory representative and the personal identification number of the proxy representative or statutory representative, must be given. The personal data given to Valmet or Euroclear Finland Oy by shareholders is used only in connection with the General Meeting and with the processing of related registrations.

The conditions and instructions relating to the electronic advance voting may be found the Company’s website www.valmet.com/egm.

5. Other information

The Company will arrange an opportunity for shareholders who have registered for the meeting to follow the meeting online via a webcast. Detailed instructions on following the webcast can be found on the Company’s website www.valmet.com/egm before the meeting. Shareholders are asked to take into account that following the meeting via webcast is not considered as participation in the General Meeting and that it does not make possible for shareholders to exercise their rights in the General Meeting through the webcast. It is recommended for shareholders to exercise their voting rights in advance or alternatively by proxy representation (instructions above) in addition to following the General Meeting via the webcast.

The Company is offering shareholders the possibility to submit questions concerning matters on the agenda of the General Meeting in advance. The questions must be submitted by email to the address ir@valmet.com by September 8, 2021 at 10 a.m. (Finnish time). Such advance questions do not constitute information requests pursuant to Chapter 5, Section 25 of the Finnish Companies Act but the Company will seek to address the questions on its website www.valmet.com/egm by September 13, 2021 and during the meeting to the extent possible.

The Company will, at the latest by August 20, 2021 provide shareholders, on the Company’s website at www.valmet.com/egm, with a pre-recorded presentation in which the management of the Company present the Merger. The presentation is not a part of the General Meeting and will be in English with Finnish subtitles.

Pursuant to Chapter 5 Section 25 of the Finnish Companies Act, a shareholder who is present at the General Meeting has the right to request information with respect to the matters to be considered at the meeting.

On the date of this notice August 9, 2021, the total number of shares and votes in Valmet is 149,864,619. The total amount includes 391,358 treasury shares held by the Company. Such treasury shares held by the Company do not have voting rights.

In Espoo August 9, 2021

VALMET OYJ

The Board of Directors

For further information, please contact:

Rasmus Oksala, General Counsel, Valmet, tel. +358 50 3173 830

Pekka Rouhiainen, Director, Investor Relations, Valmet, tel. +358 10 672 0020

Important notice

In a number of jurisdictions, in particular in Australia, Canada, South Africa, Singapore, Japan and the United States, the distribution of this notice may be subject to restrictions imposed by law (such as registration of the relevant offering documents, admission, qualification and other regulations). In particular, neither the Merger Consideration nor any other securities referenced in this notice have been registered or will be registered under the United States Securities Act of 1933, as amended (the U.S. Securities Act) or the securities laws of any state of the United States and as such neither the Merger Consideration nor any other security referenced in this notice may be offered or sold in the United States except pursuant to an applicable exemption from registration under the U.S. Securities Act. There will be no public offering of securities in the United States.

This notice is neither an offer to sell nor the solicitation of an offer to buy any securities and shall not constitute an offer, solicitation or sale in the United States or any other jurisdiction in which such offering, solicitation or sale would be unlawful. Save as required by applicable law or regulation, this notice must not be forwarded, distributed or sent, directly or indirectly, in whole or in part, in or into the United States, or otherwise in or into any jurisdiction where the distribution of these materials would breach any applicable law or regulation, or would require any registration or licensing within such jurisdiction. Failure to comply with the foregoing limitation may result in a violation of the U.S. Securities Act or other applicable securities laws.

It should be noted that certain statements herein which are not historical facts, including, without limitation, those regarding expectations for general economic development and the market situation, expectations for customer industry profitability and investment willingness, expectations for company growth, development and profitability and the realization of synergy benefits and cost savings, and statements preceded by “expects”, “estimates”, “forecasts” or similar expressions, are forward-looking statements. These statements are based on current decisions and plans and currently known factors. They involve risks and uncertainties that may cause the actual results to materially differ from the results currently expected by the Company.

Such factors include, but are not limited to:

(1) general economic conditions, including fluctuations in exchange rates and interest levels that influence the operating environment and profitability of customers and thereby the orders received by the Company and their margins,

(2) the competitive situation, especially significant technological solutions developed by competitors,

(3) the Company’s own operating conditions, such as the success of production, product development and project management and their continuous development and improvement,

(4) the success of pending and future acquisitions and restructuring.

Valmet is the leading global developer and supplier of process technologies, automation and services for the pulp, paper and energy industries. We aim to become the global champion in serving our customers.

Valmet’s strong technology offering includes pulp mills, tissue, board and paper production lines, as well as power plants for bioenergy production. Our advanced services and automation solutions improve the reliability and performance of our customers’ processes and enhance the effective utilization of raw materials and energy.

Valmet’s net sales in 2020 were approximately EUR 3.7 billion. Our 14,000 professionals around the world work close to our customers and are committed to moving our customers’ performance forward – every day. Valmet’s head office is in Espoo, Finland and its shares are listed on the Nasdaq Helsinki.

Read more www.valmet.com, www.twitter.com/valmetglobal

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