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Hydro Acquires Sapa

This $3.3 billion deal makes Hydro a global force in extruded aluminum systems.

Norsk Hydro ASA (Oslo, Norway) has agreed with Orkla ASA (Oslo, Norway) to acquire their 50 percent interest in Sapa AS (Oslo, Norway) for a total enterprise value of $3.26 billion, giving them full ownership of the global leader in extruded aluminum systems and making Hydro a leading force in the global aluminum industry. Highlights of this transaction include:

  • Binding agreement to acquire Orkla’s 50 percent interest in Sapa.
  • Sapa enterprise value NOK 27 billion ($3.26 billion).
  • Accretive to earnings and strong cash generation from Sapa from day 1
  • Synergies of NOK 200 million ($24.2 million) per year, mainly related to remelt and recycling.
  • Sapa to become new business area in Hydro, named Extruded Solutions.
  • Anticipated closing of the transaction in second half 2017.

The strong strategic rationale behind making this deal includes:

  • Global leadership: worldwide production and customer offering, with unparalleled technological capability.
  • Growth: capability and freedom to grow in the most attractive areas of global aluminum.
  • Infinite solutions: responsible operations and sustainable solutions for the future low-carbon economy.

This transaction will be financed through cash positions and issuance of bonds in Norwegian and international markets, and will be temporarily funded by committed undrawn credit lines. Following the transaction, Hydro is committed to retain their investment grade rating and a robust balance sheet. Hydro will maintain their dividend policy of returning 40 percent of net income over the cycle, with NOK 1.25 ($0.15) per share seen as a floor in 2017.

The purchase price will be paid in cash at completion, adjusted for net debt and normalized working capital. Completion of the transaction is subject to approval from relevant competition authorities, and is expected in the second half of 2017, pending approvals from relevant competition authorities in Brazil, Canada, China, EU and Turkey.

www.hydro.com

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