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Frequently asked questions about the demerger

This section contains frequently asked question related to the demerger.


Questions related to Metso ADR

 

What is the key rationale for the demerger?

The purpose of the Demerger is to offer the best preconditions for Valmet and Metso to efficiently utilize their respective strengths in their respective customer industries. Metso has developed its businesses actively during the past decade through investing in the development of their global service capabilities, broadening their technology offering through research and development and building their market positions through acquisitions.

Both companies are assessed to be globally leading companies in their respective markets and management believes that the next steps in their strategic development would be taken most efficiently as two separate companies, enabling more focused strategies and operations. The increased focus of their respective management and Boards of Directors should also help each of the two independent companies to achieve stronger growth and improved profitability. Management expects the demerger to improve the potential for increased value for shareholders as both companies are assessed to have their own distinct characteristics while offering different investment profiles.

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Why is the division of the businesses being implemented as a partial demerger of Metso and what does it mean?

The process of partial demerger is more practical and cheaper, in terms of transaction-related costs, and, in general, more suitable for Metso’s current situation than a full demerger.

Partial demerger means listing of just one company (Valmet) while Metso continues to be listed with its shareholdings unaffected. In a full demerger, existing Metso would have to be demerged into two new companies, and both of those would have to be listed on the stock exchange separately.

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How and where will the resolution concerning the demerger be made?

The resolution concerning the partial demerger was made by Metso’s shareholders in the Extraordinary General Meeting (EGM) held on October 1, 2013.

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What happens to my current Metso shares?

Shareholdings in Metso remain unchanged. Shares in Valmet were issued as demerger consideration to the shareholders of Metso in proportion to their shareholdings in Metso (1:1) at the moment of demerger implementation. In practice, this means that a person who held one Metso share on December 31, 2013, received one share in Valmet. The ownership structures of the continuing Metso and the new Valmet will be identical as per the registration date of the completion of the Demerger.

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Will all shareholders receive the demerger consideration?

The demerger consideration (Valmet shares) was distributed to all Metso shareholders, excluding own shares held by Metso, based on the situation on the registration date of the registration of the demerger December 31, 2013. Metso’s shareholders received one (1) share in Valmet for each share in Metso owned as demerger consideration.

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What do I have to do to receive Valmet shares?

In connection with the demerger, only shareholders of Metso received shares in Valmet. In other words, Valmet shares were not sold in the market in connection to the listing.

If you were a Metso shareholder on December 31, 2013:                                 - No action was required from Metso shareholders in relation to receipt of Valmet shares. - Valmet share was automatically “separated” from the Metso share when the demerger was registered, which took place on December 31, 2013. At that time, Metso’s shareholders received one (1) share in Valmet for each share in Metso owned.

If you were not a Metso shareholder on December 31, 2013:                             - Public trading in the new Valmet shares commenced on January 2, 2014.

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How many Valmet shares will I receive?

You received one Valmet share for each Metso share that you hold on December 31, 2013.

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When do I have to buy shares in Metso at the latest in order to receive shares in Valmet?

Valmet shares were distributed as a demerger consideration to Metso shareholders according to the ownership at the moment of the registration on December 31, 2013. In order to receive demerger consideration (Valmet shares), Metso shares must be bought at the latest on Monday, December 30, 2013, the last trading day prior to the registration of the completion of the demerger.

The settlement period for trades in normal share trading is three (3) banking days. Thus, any trades made between Monday, December 23 and Monday, December 30, 2013 were not settled yet on Tuesday, December 31, 2013, and therefore not visible in Metso’s shareholder register. - If you bought Metso shares during the above-mentioned period, you will get upon settlement both shares in Metso and shares in Valmet corresponding to the amount of shares in Metso bought – i.e. the Metso share is split into two shares (Metso + Valmet) during the settlement period. - If you sold Metso shares during the above-mentioned period, you will first get an equal number of Valmet shares to your book-entry account on or about Monday, December 30, 2013 (in the evening after closing of stock exchange trading) as the number of shares held in Metso. However, the right related to the sold shares in Metso to receive an equal amount of shares in Valmet transfers to the buyer, who receives these shares in Valmet upon settlement.

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What is the record date of the demerger?

There is no such record date in a demerger as there is for example in rights issues. Shares in Valmet were distributed as demerger consideration to Metso shareholders according to ownership at the moment of the registration of the completion of the demerger on December 31, 2013 (due to technical reasons recorded to book-entry accounts already on Monday, December 30, 2013). Regarding the Metso share trades which are in the settlement process on that date, please see the answer to question "When do I have to buy shares in Metso at the latest in order to receive shares in Valmet?"

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When will I receive the new shares in Valmet?

The right to shares in Valmet arose on the basis of Metso shares held on December 31, 2013, but in practice the shares in Valmet were registered in the shareholders’ book-entry accounts already on Monday, December 30, 2013 (in the evening after the close of stock exchange trading).

Please see the answer to question "When do I have to buy shares in Metso at the latest in order to receive shares in Valmet?" .

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How will the current Metso share price be split in the partial demerger?

The Metso share will continue to be listed on the Helsinki Stock Exchange and its price will be determined by normal share trading. The company does not speculate on the market value of Valmet, which will be determined on the basis of normal share trading as Valmet is now listed and the partial demerger completed.

Monday, December 30, 2013, was the last trading day on which Valmet was included in the Metso share and its price. The trading of shares in Valmet commenced on January 2, 2014 as a separate security.

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When and where will the trading in Valmet shares commence?

Valmet shares were listed on the official list of NASDAQ OMX Helsinki Ltd on the first banking day after the registration of the completion of the demerger, on January 2, 2014. The demerger does not affect the trading of the shares in Metso.

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Will the demerger result in costs to me?

The demerger will not cause any direct costs to Metso shareholders. The demerger consideration, i.e. the shares in Valmet, were recorded in the book-entry accounts of Metso shareholders without any costs to the shareholder.

Trading in the shares in Valmet and Metso is normal stock exchange trading. Each custodian, book-entry account operator and broker will charge fees for stock exchange trading assignments and custody of shares according to their price lists.

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Will the partial demerger result in tax consequences for Metso or its shareholders?

Metso has received a preliminary taxation decision from the Finnish tax authorities according to which the demerger is treated as tax neutral in Finland.

The company cannot speculate on any potential tax impact to shareholders, which may also vary between various countries of residence. The company recommends that a shareholder independently confirms potential tax consequences of the partial demerger to himself/herself.

A demerger that is considered tax neutral under Finnish corporate and tax legislation will not cause any transfer tax consequences for the shareholders of the demerging or receiving company when the demerger consideration is paid in the shares of the receiving company.

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How will the purchase price of Metso and Valmet shares be determined upon Metso’s partial demerger in the taxation of Finnish shareholders?

The original purchase price of the share in Metso (which varies depending on the date of acquisition) will be split between the shares in Metso and Valmet, either in proportion to the net assets of the companies at the time of the demerger or the proportion of the fair values of the shares. The proportion of fair values will be used if the division ratio of net assets materially differs from the proportion of the fair values of the shares.

According to the prevailing taxation practice in Finland, the market value of the shares in the demerging company and the receiving company, respectively, would be the weighted average price of the shares on the first trading day or, alternatively, the corresponding average price of the shares on the first five trading days if the average price of this five-day period is considered to better reflect the market value of the shares. The tax authorities have considered a deviation of at least approximately 20 percent to be material.

The allocation of the acquisition cost of shares in Metso and Valmet can be determined only after the calculations presenting the allocation of net assets between Metso and Valmet as well as the weighted average price of the shares in Metso and Valmet on the first trading day and the corresponding average price of the shares on the first five trading days are known. Trading of shares in Valmet on the official list of the Helsinki Stock Exchange commenced on January 2, 2014. Financial statements 2013 both for Valmet and Metso will be published approximately on February 6, 2014.

After the partial demerger, the original acquisition date of shares in Metso is the acquisition date for both shares in Metso and shares in Valmet received as demerger consideration.

Finnish non-corporate shareholders may alternatively apply the acquisition cost presumption (20% / 40%) in determining the acquisition cost of both shares in Metso and Valmet in their capital gain taxation.

This answer applies only to Finnish resident shareholders. Non-Finnish shareholders should find out locally how the share acquisition price will be determined in their taxation.

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Questions related to Metso ADR

Will all Metso ADR holders receive the demerger consideration?

The demerger consideration (Valmet shares) will be NOT distributed to Metso ADR holders. ADR holder cannot receive the Valmet shares, as the shares are not registered in the United States, BNY Mellon, as depositary bank will undertake selling the Valmet shares in the local market and distribute the cash proceeds to the eligible holders. Metso’s ADR holders will receive one a cash distribution from the sale of VALMET shares as demerger consideration.

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What happens to my current Metso ADR?

Your current Metso ADR holding remain unchanged. For an ADR holder, the entitlement of ORD shares will be sold in the local market and distributed as a “proceeds from the sale of shares”.

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When will I receive the cash distribution as demerger consideration?

The cash distribution from the sale of Valmet shares will be made as soon as practicable once the sale is completed.

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How many Valmet shares will I receive?

Your cash consideration from the sale will be in proportion to one Valmet share for each Metso ADR that you hold on December 31, 2013.

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Will the demerger result in costs to me?

There is no cost resulting from the demerger, however there will be a fee deducted from the cash proceeds distributed to ADR holders.

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Updated on February 20, 2014.