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2020-07-13

Alfa Laval announces a recommended public cash tender offer for all shares in Neles

Nasdaq Helsinki Ltd Announcement from the exchange Alfa Laval announces a recommended public cash tender offer for all shares in Neles THIS STOCK EXCHANGE RELEASE MAY NOT BE RELEASED, PUBLISHED OR OTHERWISE DISTRIBUTED, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO AUSTRALIA, CANADA, HONG KONG SPECIAL ADMINISTRATIVE REGION OF THE PEOPLE’S REPUBLIC OF CHINA, JAPAN, NEW ZEALAND, SOUTH AFRICA, OR ANY OTHER JURISDICTION IN WHICH THE TENDER OFFER WOULD BE PROHIBITED BY APPLICABLE LAW. FOR FURTHER INFORMATION, PLEASE SEE SECTION ENTITLED “IMPORTANT INFORMATION” BELOW. Alfa Laval announces a recommended public cash tender offer for all shares in Neles Alfa Laval AB (publ), 13 July 2020 Alfa Laval AB (publ) ("Alfa Laval" or the "Offeror"), a Swedish public limited liability company, and Neles Corporation ("Neles" or the "Company") have on 13 July 2020 entered into a combination agreement (the "Combination Agreement") pursuant to which Alfa Laval will make a voluntary recommended public cash tender offer for all issued and outstanding shares in Neles that are not held by Neles or any of its subsidiaries (the "Tender Offer"). In the Tender Offer, Neles’ shareholders will be offered a cash consideration of EUR 11.50 for each issued and outstanding share in Neles (the "Offer Price"), valuing Neles’ total equity at approximately EUR 1,727 million. The members of the Board of Directors of Neles who participated in the decision-making have unanimously decided to recommend that the shareholders of Neles accept the Tender Offer. Alfa Laval has identified the industrial flow control market as a key growth area. The transaction enables Alfa Laval to considerably strengthen its presence in the large industrial flow control space where the company currently offers mainly energy efficiency solutions. On the other hand, Alfa Laval believes there are several areas where being part of the Alfa Laval Group can make a significant contribution to the future development of Neles, such as leveraging Alfa Laval’s existing global platform. Alfa Laval has a proud history of preserving and investing in the Nordic region, evidenced by its 5,400 strong work force of employees. Alfa Laval has a proven track record of entering adjacent markets through platform investments in quality companies and, after having built a significantindustrial presence in Sweden, Denmark, and Norway, Neles’ Finnish footprint will be completing Alfa Laval’s Nordic platform. Neles is a global leader in flow control solutions and services. The Company’s valves and valve automation technologies are known for quality, reliability and highest safety. Neles started trading as an independent company on 1 July 2020 following the partial demerger of Metso Corporation ("Metso") (the "Demerger"), but the business has a long track record with a history of more than 60 years of innovation. The transaction is expected to result in significant benefits for stakeholders, including creation of shareholder value for both Neles and Alfa Laval shareholders. Alfa Laval believes that there is a strong strategic and cultural fit in the transaction. KEY HIGHLIGHTS AND SUMMARY OF THE TENDER OFFER -- The Offer Price is EUR 11.50 in cash for each issued and outstanding share in Neles. -- The Offer Price represents a premium of approximately: -- 32.8 percent compared to the closing price of the Neles share (EUR 8.658) on the official list of Nasdaq Helsinki Ltd ("Nasdaq Helsinki") on 10 July 2020 , the last trading day before the announcement of the Tender Offer; and -- 29.6 percent compared to the volume-weighted average trading price of the Neles share on Nasdaq Helsinki during the period from 1 July 2020, the first trading day after the date of registration of the Demerger, up until and including 10 July 2020, the last trading day before the announcement of the Tender Offer, and excluding the impact of Valmet Corporation's ("Valmet") acquisition of shares representing 14.88 percent of all shares in Neles from Solidium Oy ("Solidium"), which was announced by Valmet on 17 June 2020 and completed on 1 July 2020; and -- 35.8 percent compared to the volume-weighted average trading price of the Neles share on Nasdaq Helsinki during the period from 1 July 2020, the first trading day after the date of registration of the Demerger, up until and including 10 July 2020, the last trading day before the announcement of the Tender Offer. -- The members of the Board of Directors of Neles who participated in the decision-making have unanimously decided to recommend that the shareholders of Neles accept the Tender Offer. -- Cevian Capital, who holds approximately 10.9 percent of the issued and outstanding shares in Neles, has on customary conditions irrevocably undertaken to accept the Tender Offer. -- The completion of the Tender Offer is subject to certain customary conditions being fulfilled or waived by Alfa Laval on or by the date of Alfa Laval's announcement of the final result of the Tender Offer. These include, among others, the obtaining of all necessary regulatory approvals and that the Tender Offer has been accepted with respect to shares representing, together with shares otherwise acquired by Alfa Laval prior to or during the offer period, more than two-thirds (2/3) of the issued and outstanding shares and votes in Neles. -- Should Alfa Laval obtain more than 90% of the issued and outstanding shares and votes in Neles, Alfa Laval intends to initiate mandatory redemption proceedings in accordance with the Finnish Companies Act to acquire the remaining shares in Neles, and thereafter to cause Neles’ shares to be delisted from Nasdaq Helsinki as soon as reasonably practicable. Should Alfa Laval obtain less than 90% but more than two-thirds (2/3) of the issued and outstanding shares and votes in Neles, Alfa Laval would assess alternatives to acquire the remaining shares in Neles over time, and it is possible that Neles could become subject to certain corporate transactions, including for example purchases of further shares in Neles after completion of the Tender Offer, or a statutory cross-border merger with and into Alfa Laval. Alfa Laval has not taken any decisions on the timeline of any such possible transactions or whether any such transactions would be undertaken at all. -- The Tender Offer will be financed through a combination of Alfa Laval’s own funds and debt facilities from Skandinaviska Enskilda Banken AB (publ) ("SEB"). Alfa Laval has secured fully committed debt financing from SEB on a customary certain funds basis, and the availability of the debt financing is subject only to the completion of the Tender Offer and certain conditions that are customary for a certain funds financing arrangement of this kind. The Offeror’s obligation to complete the Tender Offer is not conditional upon availability of financing. -- Alfa Laval and Neles have undertaken to comply with the recommendation on procedures to be followed in Finnish public tender offers issued by the Finnish Securities Market Association (the "Helsinki Takeover Code"). -- Alfa Laval will on or about 13 August 2020 publish a tender offer document (the "Tender Offer Document") with detailed information about the Tender Offer and information on how to accept the Tender Offer. -- The offer period under the Tender Offer is expected to commence on or about 13 August 2020 and to expire on or about 22 October 2020 , unless the offer period is extended by Alfa Laval in accordance with the terms and conditions of the Tender Offer and applicable laws. The Tender Offer is currently expected to be completed during the fourth quarter of 2020. OVERVIEW OF THE COMBINED COMPANY Neles and Alfa Laval would create a larger and stronger global player in the flow control market. As a combined company, Neles would become an integral part of Alfa Laval’s organization structure while largely retaining its operational structure and strong identity within the Alfa Laval network. The combined company’s combined revenue for the twelve months ended 31 March 2020 was approximately SEK 53.8 billion (Alfa Laval: SEK 47.0 billion; Neles: EUR 642 million (converted using the European Central Bank’s average EUR/SEK exchange rate of 10.651 between 1 April 2019 and 31 March 2020)) and it had a combined total of approximately 20,300 employees globally on 31 March 2020. The transaction is expected to be EPS accretive for Alfa Laval beginning from the first year following the completion of the Tender Offer. BACKGROUND AND ALFA LAVAL’S STRATEGIC RATIONALE Alfa Laval is a leading global provider of products and solutions based on its key technologies of heat transfer, separation and fluid handling. The company plays a vital role in areas that are crucial for society, such as energy efficiency, environmental protection and food production. Alfa Laval’s products are used in the manufacturing of food, chemicals, pharmaceuticals, starch, sugar and ethanol as well as in nuclear power, onboard vessels; and in the engineering sector, mining industry and refinery sector, treating wastewater and in creating a comfortable indoor climate. Alfa Laval’s worldwide organization helps customers in nearly 100 countries to optimize their processes. The company has 42 major production units (22 in Europe, 10 in Asia, 8 in the US and 2 in Latin America) and over 17,000 employees, the majority of whom are located in Sweden, Denmark, India, China, the US and France. Neles is a global leader in flow control solutions and services. The Company’s valves and valve automation technologies are known for quality, reliability and highest safety. The customers of Neles operate in oil and gas refining, pulp, paper and bioproducts industry, chemicals and other proce...

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