Outokumpu to sell its fabricated copper products business to Nordic Capital

Despite notable capital loss, Outokumpu content with transaction

Karri Kaitue

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Outokumpu announced on Tuesday the selling of its fabricated copper products business to the private equity firm Nordic Capital. The selling price was agreed at EUR 599 million.
      In spite of the recognised capital loss of EUR 220 million, Outokumpu is still pleased with the transaction.
     
The transaction did not come as a surprise, as already six months ago Outokumpu declared the selling of the copper business to be one of its key objectives.
      Strategically the company will now concentrate on selling stainless steel and technology solutions.
      Outokumpu has declared its vision to become the undisputed world number one in stainless steel, not in terms of company size but the quality of the products and profitability.
      The company also feels that focusing on just one field will make good business sense to its investors.
      The latest transaction marks Outokumpu's final separation from copper production, the activity that first launched the company nearly a hundred years ago. The company's copper mines have already been sold off earlier.
      According to executive vice president Karri Kaitue, stainless steel production will henceforth account for 95 percent of Outokumpu's turnover.
     
As a result of the selling of the copper business Outokumpu's gearing will decrease by nine percentage points.
      Outokumpu's extensive investments in its refined steel factory in Tornio led to the company's debt-equity ratio climbing over one hundred percent last year.
      The company's target level for gearing is 75 percent.
      Despite the latest transaction, Outokumpu's share price dropped by about three percent on the Helsinki Stock Exchange on Tuesday.
      This may have resulted from the Outokumpu CEO Juha Rantanen's review given at the shareholders' meeting, according to which the market conditions for stainless steel have weakened in Europe.
      Because of the difficult market situation in Europe, the company has lately targeted the Asian market instead.
     
The Tube and Brass division of Outokumpu Copper is not included in the scope of the deal with Nordic Capital. Outokumpu plans to divest these businesses at a later date, once they have been brought back into profit.
      Outokumpu acquired some of the Tube and Brass division units in connection with the Boliden transaction at the end of 2003. Their integration and restructuring process is still in progress.
      Boliden is a Swedish mining and metal company that Outokumpu sold off the year before last.
      Outokumpu Copper's current president Kalevi Nikkilä will continue in charge of the businesses within the scope of the transaction until closing, after which he will retire. The closing date is scheduled for June.
     
Bo Söderberg, Partner at Nordic Capital, announced on Tuesday that he believed in good prospects for Outokumpu Copper Products for example in Asia. According to Söderberg, stricter environmental standards, for one, have created new markets for copper use.
      Nordic Capital has declared it will purposefully develop the copper company's operations. Nordic Capital is generally believed to be interested in divesting the copper company in a couple of years' time.


Previously in HS International Edition:
  Outokumpu giving up copper - hopes to become world leader in stainless steel (1.9.2004)

Links:
  Outokumpu Group

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