Norsk Hydro ASA has reached a non-binding agreement in principle to sell the former VAW Flexible Packaging business to Alcan Inc.
The transaction forms part of a previously announced divestment program, under which Norsk Hydro so far has reached agreement in principle or completed divestments with an enterprise value in excess of NOK 6 billion.The sales agreement for Flexible Packaging results from a structured competitive process run by the financial advisor Schroder Salomon Smith Barney. The agreed selling price is approximately Euro 345 million, which represents an enterprise value of Euro 415 million when minority interests are included. The transaction is not expected to result in a significant gain or loss to Norsk Hydro, with the exception of potential currency translation effects at closing (exchange rates per September giving an unrealized loss of Euro 17 million). The amount will be settled in the form of cash and the assumption of debt and pension liabilities. When announcing its agreement to buy VAW aluminium AG in January this year, Hydro stated that Flexible Packaging was non-core to Hydro Aluminium's operations and that it planned to divest this part of the acquired company. “We are pleased to have found a solution that, when the transaction is final, will clear the uncertainty about the future for the Flexible Packaging sector, its employees, management and customers,' says Hydro Aluminium CEO Jon-Harald Nilsen. 'The proposed transaction represents a good industrial solution for Flexible Packaging and an attractive price for Hydro.” Hydro Aluminium will continue to focus on its core areas and will remain a leading European supplier of aluminium foil and rolled products for packaging applications from its Rolled Products business sector. A definitive agreement will be signed once Norsk Hydro has completed its consultations with the representative employee bodies. The transaction will be subject to clearance by European competition authorities. Norsk Hydro and Alcan have also reached a related agreement in principle that Alcan will, upon signing for the definitive agreement for the flexible packaging business, waive any alleged pre-emptive rights in relation to the Alunorf Rolling Mill and terminate the related litigation. Alcan had instituted legal proceedings in Germany alleging pre-emptive rights in respect of the VAW 50 percent of Alunorf, triggered by the Hydro acquisition of VAW aluminium AG. Based on this fair solution Hydro look forward to working with Alcan to achieve mutually beneficial improvements in the operations in Alunorf, a world benchmark rolling mill. VAW Flexible Packaging is focusing on flexible packaging solutions for a wide variety of end use customers. At the end of last year the operation employed approximately 5,400 people. Flexible Packaging generated net sales of Euro 637 million and EBITDA of Euro 51 million in 2001. |
