Aker Kvaerner to Sell Pulping and Power Businesses to Metso

Aker Kvaerner has signed a letter of intent to sell their pulping and power businesses to Metso. The transaction will allow the Pulping and Power businesses to continue to grow under a new ownership, and Aker Kvaerner will free up financial and human resources to concentrate efforts on other core areas. The transaction value is estimated to be approximately NOK 3 billion, subject to closing adjustments.

The acquisition is subject to completion of the due diligence process by Metso, signing of the final sale and purchase agreement, and obtaining the relevant regulatory approvals. The parties aim to sign the final agreement by mid April 2006.

For Aker Kvaerner, the deal will have a positive net cash effect of approximately NOK 2.6 billion. Net gain for Aker Kvaerner compared to book value of the businesses is estimated to be a total of NOK 2.4 billion. Aker Kvaerner will continue to operate Pulping and Power until the transaction has been finally concluded. The parties have agreed to an adjustment mechanism for the transaction price where Aker Kvaerner will retain changes in the equity from October 2005 until the final closing of the deal.

"We are pleased with the improvements we have achieved in the Pulping and Power businesses over the last few years, with remarkable growth and with technology and systems which in some areas are leading within this industry," says Inge K. Hansen, President and CEO in Aker Kvaerner. "The market is increasingly asking for deliveries of an even more complete range of products and services. We firmly believe that the new home for these two business units, integrated with Metso's operations, will enable them to achieve the further growth prospects that they are capable of and open up new industrial opportunities as they go forward," says Mr. Hansen.

Of Aker Kvaerner's 22 000 employees serving the international oil, gas and process industries, the Pulping and Power businesses have approximately 2 000 employees with main operations in Sweden, Finland, USA, Canada, Japan and Brazil. In 2005, the Pulping and Power business had operating revenues of NOK 4 523 million, an EBITDA of NOK 329 million and an EBIT of NOK 279 million. The order backlog at 31 December 2005 was NOK 4 819 million.

Finnish based Metso Paper's Fiber Business Line serves the pulp and paper industry with chemical, mechanical and recycled fiber technologies and related services. In 2005, the Fiber Business Line's net sales were EUR 489 million. It has some 2 000 employees with main locations in Finland and Sweden.

The acquisition will enable Metso Paper to complement its Fiber business line's product scope with Aker Kvaerner's leading technology. Following the successful completion of the transaction, Metso Paper will be able to deliver all processes for modern pulp mills, including chemical pulping lines, chemicals recovery and power generation for pulp and paper production. As a result, Metso Paper will be able to serve its pulp and paper customer globally with a wide and advanced product offering and life cycle services.

"The deal fits well with our strategy of profitable growth. The demand for chemical pulp mill processes has developed favourably in recent years, especially in South America and Asia, and we expect the positive development to continue. In light of this, we see the acquisition of Aker Kvaerner's Pulping and Power business as an excellent opportunity to complement both our technology base and our customer service in chemicals recovery and hardwood pulping processes," notes Risto Hautamäki, President of Metso Paper.

Metso Paper is part of Metso, a global engineering and technology corporation with 2005 net sales of approximately EUR 4.2 billion. Its 22 000 employees in more than 50 countries serve customers in the pulp and paper industry, rock and minerals processing, the energy industry and selected other industries.

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Posted 10/02/06

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