Outokumpu takes control in Boliden reorganization

Scandinavian metal producers Outokumpu and Boliden (BLS-T) have announced plans for an asset swap that will move all Outokumpu’s remaining mining assets to Boliden and give Outokumpu a 49% shareholding in the reorganized Boliden.

Under the terms of the deal, Boliden takes ownership of the Tara zinc mine in Ireland, two Outokumpu zinc smelters (in Kokkola, Finland, and Odda, Norway), and Outokumpu’s downstream copper operations, the Harjavalta smelter and Pori refinery, both in Finland. A Dutch-based metal sales operation comes with the deal.

The parties valued the Outokumpu assets at EU 736 million. In exchange, Outokumpu gets rights to a share issue that will give it a 49% interest in Boliden, with an implied value of EU 307 million. Boliden will take a bank loan to provide EU 373 million in cash, and a subordinated vendor note of EU 56 million.

Boliden, in turn, will sell Outokumpu its metal-fabrication business (four European plants) and its Boliden Contech division, which markets mining and processing technologies developed by the company. Boliden gets 5 million shares in Outokumpu in exchange for the fabrication and technology businesses, valued at EU 49 million.

Boliden is also planning a further issue of rights to existing shareholders, amounting to a value around EU 150 million. Both Outokumpu and the Carl Bennet Company, one of Boliden’s largest shareholders, have committed to taking up their share of rights in the secondary issue.

Outokumpu gets four seats on the new Boliden board, with three directors to be appointed by the present shareholders. There will also be some employee representation on the new board. Boliden shareholders will have a vote on the proposed deal.

The deal, which will also be subject to review by competition regulators, should be final in October. Closing is scheduled for year-end.