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Outotec to acquire control in Larox Corporation and to make a mandatory public tender offer for all the remaining Larox shares


WEBWIRE

Outotec Oyj (“Outotec”) aims to increase its business for example by acquiring complementing technologies, increasing significantly the proportion of services in its sales and applying existing technologies in new industries. In order to speed up growth Outotec has agreed with certain main shareholders of Larox Corporation (“Larox”) on share transactions, in which they sell all their Larox series A and B shares to Outotec. The purchase price for the shares shall be paid in the form of new Outotec shares. Upon completion of the share transactions, Outotec will make a mandatory public tender offer for all the remaining Larox series A and B shares.

Combining the businesses of Outotec and Larox will further strengthen Outotec’s position as a globally leading provider of technology solutions and services to the mining and metals industry and enable Larox to develop its business in an international, financially solid technology group operating in the same industry.

“Our aim to supplement the technology portfolio became achievable through this share exchange arrangement. Larox’s products and services fit seamlessly into Outotec’s technology portfolio. The transaction also supports our objective of profitable growth. By combining our respective sales and service networks and product portfolios we can provide even more comprehensive solutions and services for minerals concentrators and metallurgical plants and generate more added value to our joint customer base,” says Tapani Järvinen, CEO of Outotec.

“I believe that this arrangement will provide Larox’s employees with more diverse opportunities to develop their careers and all shareholders will be offered an opportunity to continue to invest in a strong company within the same industry. Also the customers will benefit from the increased resources, which will allow Larox to persistently develop and increase the filtration business”, says Timo Vartiainen, Chairman of the Board of Directors of Larox.


Benefits of the combination

Outotec estimates that the combination will provide substantial benefits to the shareholders and other stakeholders of both companies.

* Larox’s filtration technologies complement Outotec’s technology portfolio and enable the offering of comprehensive solutions for minerals concentrators and metallurgical plants of the large joint customer base.
* The transaction is expected to increase Outotec’s service business by over EUR 70 million and enable Outotec to increase its sales of services to an annual level of EUR 250-300 million by the end of 2010.
* The transaction supports Outotec’s businesses relating to industrial water treatment and the energy sector.
* Larox provides Outotec access to the chemical industry market on which Outotec can offer for example water treatment solutions.
* Combining the global sales and service networks and administration of both companies as well as economies of scale achieved by the larger size are estimated to create synergy benefits of at least EUR 7 million annually.
* The combination is not expected to have a significant effect on Outotec’s earnings per share in 2010 excluding possible one-time costs related to the transaction. When the synergies materialize in 2011, the transaction is expected to have a clearly positive effect on Outotec’s earnings per share.
* The solid financial position and balance sheet of the combined company will enhance international growth opportunities.



Share Transactions and Tender Offer

Outotec has today on October 15, 2009 agreed with certain members of the Vartiainen family, Capillary Oy, Ilmarinen Mutual Pension Insurance Company, Mikko Laakkonen and Laakkosen Arvopaperi Oy on share transactions, in which the aforementioned will sell all their Larox series A and B shares to Outotec (the “Share Transactions”). The purchase price for such shares will be paid in the form of new Outotec shares. The shares to be purchased correspond altogether to 94.40 per cent of all the votes in Larox, to 99.99 per cent of all Larox series A shares and to 61.89 per cent of all Larox series B shares. The completion of the Share Transactions is conditional on the receipt of necessary approvals from the competition authorities (the “Competition Clearances”). Based on a preliminary analysis, Outotec does not consider it likely that the receipt of the Competition Clearances would, in addition to the first phase investigation, require a second phase investigation and estimates therefore the clearances to be received in December, at the latest.

Upon completion of the Share Transactions, Outotec will make a mandatory public tender offer pursuant to the Finnish Securities Market Act for all series A and series B shares in Larox that are not yet, as a consequence of the Share Transactions or otherwise, owned by Outotec (the “Tender Offer”).

In connection with the Share Transactions Capillary Oy has informed Outotec that it will make an offer to Larox to purchase the 49 per cent share held by Larox of Larox Flowsys Oy’s share capital. Provided that the Board of Directors of Larox decides on such sale after the completion of the Share Transactions, Outotec has confirmed that it will, after the completion of the Tender Offer, contribute to the fact that the shares in Larox Flowsys Oy owned by Larox will be assigned to Capillary Oy for their fair price at the time of the sale and that Larox Flowsys Oy shall be entitled to continue using the name “Larox” for an agreed period. Based on a statement given by an external independent expert the value of the Larox Flowsys Oy shares to be sold is currently approximately EUR 3.5 million.

The Offer Consideration

The consideration to be offered for each series A and series B share in the Tender Offer equals to the consideration under the Share Transactions, i.e. 0.45 Outotec shares per each Larox series A share and 0.40 Outotec shares per each Larox series B share (the “Share Consideration”). Should the aggregate Share Consideration, to which an individual Larox shareholder would, based on the above exchange ratios, be entitled to, not be an integer, the number of Outotec shares to be offered to him/her as consideration will be rounded up to the nearest integer.

As required under the Finnish Securities Market Act, a cash consideration of EUR 10.76 per each series A share and EUR 9.56 per each series B share will be offered as an alternative in the Tender Offer (the “Cash Consideration”). The amount of the Cash Consideration corresponds to the value of the Share Consideration based on the closing price of Outotec share on NASDAQ OMX Helsinki Ltd. on October 14, 2009, the last trading day preceding this announcement (the “Closing Day”) (the Share Consideration and the Cash Consideration jointly the “Offer Consideration”). The transaction values Larox as a whole at approximately EUR 93 million.

The Offer Consideration for each Larox series B share represents a premium of approximately 36.6 per cent compared to the closing price of the Larox series B share on NASDAQ OMX Helsinki Ltd. on the Closing Day, and a premium of approximately 41.8 per cent compared to the volume-weighted average trading price of the Larox series B share during the last 6 months. The Larox series A share is not subject to public trading.

As at the date hereof, Larox’s share capital amounts to EUR 5,628,960. The number of issued Larox series A shares amounts to 2,124,000 and series B shares to 7,301,950. Larox series A shares entitle to 20 votes each and Larox series B shares to one vote each. Outotec does not currently own any Larox shares.

Other terms and conditions of the Tender Offer

The acceptance period under the Tender Offer is expected to commence within 2-3 weeks from the completion of the Share Transactions after the receipt of the Competition Clearances, and to run for approximately 3 weeks. Outotec reserves the right to extend the acceptance period in accordance with the terms and conditions of the Tender Offer.

The detailed terms and conditions of the Tender Offer will be included in the
combined offer document and prospectus that Outotec will publish within 2-3 weeks after the receipt of the Competition Clearances.

Outotec will publish a stock exchange release on the receipt of the Competition Clearances and completion of the Share Transactions without delay.

The possible Cash Consideration to be offered in the Tender Offer will be financed through existing cash reserves of Outotec.

The effects of the transaction on Outotec

Outotec estimates the transaction to have a positive effect on Outotec’s business. The estimated synergy benefits are at least EUR 7 million annually. The transaction is not expected to have a significant effect on Outotec’s earnings per share in 2010 excluding the possible one-time costs relating to the transaction. When the synergies materialize in 2011 the transaction is expected to have a clearly positive effect on Outotec’s earnings per share.

Effects on the number of Outotec shares

The Outotec shares offered as consideration in the Share Transactions and possibly as Share Consideration in the Tender Offer will be issued in deviation from the shareholders’ pre-emptive subscription right based on the authorization given to the Board of Directors by the Annual General Meeting of Outotec on March 18, 2009.

Outotec will in connection with the completion of the Share Transactions issue 2,763,419 new shares for the payment of the consideration in the Share Transactions. If all the remaining current Larox shareholders accept the Share Consideration offered in the Tender Offer, Outotec would in connection with the completion of the Tender Offer in addition issue a maximum of approximately 1,115,500 new shares. Outotec has currently 42 million registered shares. As a consequence of the issues the total number of registered Outotec shares would amount to a maximum of approximately 45,878,900 and the current Larox shareholders would own a maximum of approximately 8.5 per cent of the aggregate shares in Outotec.

Information regarding the companies

Outotec is a leading international developer and provider of technologies for the mining and metallurgical industries. It offers innovative and environmentally sound plants, processes, equipment and services to its customers worldwide. Outotec’s sales in 2008 amounted to approximately EUR 1.2 billion and the company has approximately 2,500 employees in 21 countries. Outotec’s headquarters are located in Espoo, Finland. Outotec is listed on NASDAQ OMX Helsinki and its market capitalization on October 14, 2009, was approximately EUR 1.0 billion. Outotec will publish its January - September 2009 interim report on October 23 at 9.00 (EEST). Additional information at.

Larox develops and delivers industrial filters for separating solids from liquids. Larox’s filtration solutions are mainly used worldwide in the mining and metallurgical industries as well as in chemical processing. Larox operates in over 40 countries. The company is headquartered in Lappeenranta, Finland and it has production facilities in Finland and China. Sales in 2008 totaled EUR 208.0 million, and the number of employees was approximately 560. Larox is listed on NASDAQ OMX Helsinki and on October 14, 2009, the market capitalization of its series B shares subject to public trading was approximately EUR 51 million. The key financial figures for the period January 1 - June 30, 2009 presented in Attachment 1 hereto have been extracted from the interim report published by Larox on August 6, 2009. Larox will publish its January - September 2009 interim report on October 23 at 8.30 (EEST). Additional information at.

Advisors

Aventum Partners Ltd. acts as Outotec’s financial advisor and Roschier, Attorneys Ltd. as Outotec’s legal advisor in connection with the Share Transactions and the Tender Offer.

Teleconference:
Teleconference regarding the transaction will be held in English for investors, analysts and media starting at 4.15 p.m. (EEST). To register as a participant for the teleconference please dial:

FI/UK: +44 20 7162 0025
Code: 848509

The presentation material will be available at at 3.30 p.m.

In addition, an on demand version of the conference call will be published on Outotec webcast center later in the afternoon.

www.outotec.com

THE TENDER OFFER IS NOT BEING MADE DIRECTLY OR INDIRECTLY IN ANY JURISDICTION
WHERE PROHIBITED BY APPLICABLE LAW AND THIS STOCK EXCHANGE RELEASE IS NOT AND MAY NOT BE DISTRIBUTED, FORWARDED OR TRANSMITTED INTO OR FROM ANY JURISDICTION WHERE PROHIBITED BY APPLICABLE LAW BY ANY MEANS WHATSOEVER INCLUDING, WITHOUT LIMITATION, MAIL, FACSIMILE TRANSMISSION, E-MAIL OR TELEPHONE.



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