Sep 10, 2020
Since Valmet on June 17, 2020 announced the agreement to buy 14.9% of Neles shares from Solidium, Neles has been a hot topic in our investor meetings. The transaction took place on July 1, 2020, which was the first day of Neles’ listing on Nasdaq Helsinki. Valmet became the largest shareholder of Neles, the globally leading diversified valve, valve automation and service company. Valmet said that its target is to increase ownership when Neles’ share price supports additional purchases.
On July 13, 2020 Alfa Laval announced a public tender offer for Neles. Valmet’s CEO Pasi Laine commented the offer by confirming Valmet’s plans to participate in developing Neles further as an active shareholder and saying that Valmet does not consider Alfa Laval’s tender offer to be beneficial for Neles.
During the past month, Valmet has gradually increased its holding in Neles, and this has raised questions from investors. We put together a Q&A update about the topic.
Q: How big is Valmet’s ownership in Neles at the moment?
A: Valmet currently holds 24.7% of Neles’ shares (September 8, 2020). In addition, on September 8, 2020 we flagged that have entered into a forward contract to buy 620,000 shares, corresponding to 0.41% of Neles’ shares.
Q: Do you need permission from regulatory authorities to exceed Valmet’s ownership to above 25%?
A: Yes. We have made the filings to competition authorities in Germany and Austria.
Q: When do you expect these approvals to be granted?
A: It is difficult to say how long the process will take.
Q: How is it possible that you flagged already that your ownership in Neles has exceeded 25%?
A: Our direct ownership is 24.7%, so below the 25% threshold. However, we have on September 7, 2020 entered into a forward contract to buy more Neles shares, in case we receive the needed approvals from the regulatory authorities. This would increase our ownership above the 25% threshold, and the notification obligation also applies to financial instruments carrying entitlement to acquire shares.
Q: Do you intend to keep increasing your share?
A: As we said already in June 2020, our target is to increase our ownership when Neles’ share price supports additional purchases. Valmet’s goal is to have an active long-term role in the development of Neles.
Q: Does Valmet aim to be a shareholder in Neles in the long term?
A: Valmet’s goal is to have an active long-term role in the development of Neles. Neles will hold an Extraordinary General Meeting on October 29, 2020. Valmet will propose to the EGM that the number of the members of the Board of Directors of Neles shall be increased to eight (8) members and that in addition to incumbent members of the Board of Directors, Mr. Jukka Tiitinen be elected as a new member of the Board of Directors of Neles. Mr. Tiitinen acts currently as Area President, Asia Pacific at Valmet.
Q: Is Valmet going to make a public tender offer for Neles?
A: We do not have such plan at the moment.
Q: I would like to sell my Neles shares to Valmet. How do I proceed?
A: Valmet has not made a public tender offer for Neles. Thus, it is not possible to sell Neles shares directly to Valmet.
Q: Does Valmet’s balance sheet have the fire power to finance the share acquisitions?
A: Valmet has a strong balance sheet. Our gearing was -23% at the end of June 2020, and cash and cash equivalents amounted to EUR 518 million. Valmet has signed term-loan agreements with a total value of EUR 500 million, of which EUR 100 million was outstanding at the end of June. Valmet’s liquidity is additionally secured by a committed revolving credit facility worth of EUR 200 million, which matures in 2024 and was undrawn at the end of June, and an uncommitted commercial paper program worth of EUR 200 million, of which EUR 40 million was outstanding at the end of June 2020.