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Hydro to demerge Agri
(Nov. 28, 2003) The Board of Directors of Norsk Hydro ASA today decided to recommend to Hydro's shareholders that Hydro demerge its fertilizer business. Upon completion of the demerger, each Hydro shareholder will receive one share in the new publicly traded company for each share held in Hydro.
 TO BE LIFTED OUT OF HYDRO: The chosen transaction structure is believed to best position Agri in the capital markets and enable the new company to take an active part in the further development of the fertilizer industry. |
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The new company’s shares to be distributed to Hydro’s shareholders will constitute 80 percent of the total number of shares outstanding upon completion of the demerger. Hydro will hold the remaining 20 percent of the shares, which Hydro plans to sell in an offering at the time of the demerger, subject to market conditions.
The Board also approved a plan to modernize Hydro’s visual identity, including its logo, as part of a new brand strategy for the group. The rights to the "Viking ship" will be transferred to Agri for use in its new logo and marketing. Agri, which has been registered temporarily as AgriHold ASA, will change its name prior to the demerger.
The demerger is subject to approval by an extraordinary general meeting of Hydro scheduled for January 15, 2004.
The chosen transaction structure is believed to best position Agri in the capital markets and enable the new company to take an active part in the further development of the fertilizer industry.
The decision to establish Agri as a separate, listed company follows a comprehensive review of Hydro’s corporate portfolio concluded in June 2003. The listing of the new Agri company on the Oslo Stock Exchange is planned for March 25, 2004, and the company will be headquartered in Oslo. The head of the listed company will be Thorleif Enger, who has led Agri through its successful turnaround.
 SPLITTING UP: Thorleif Enger (left) will head the the new and listed Agri company, here pictured with Hydro's president and CEO Eivind Reiten when the plans for the Agri demerger were first announced in June, 2003. (Photo: Terje S. Knudsen) |
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"Agri is the world’s largest fertilizer business and is well positioned for further profitable growth. As a separate company, Agri will have direct access to the capital markets, providing better opportunities for value creation," says Eivind Reiten, president and CEO of Hydro. "Hydro will focus its financial and management resources to the opportunities for further development in the Oil & Energy and Aluminium business areas," Reiten says.
Hydro will give its annual operational and strategic update to the financial market on its Capital Markets Day on December 11, 2003, where Hydro’s new visual identity and logo also will be presented for the first time.
Capital Markets Days for Agri will take place on December 3-5, 2003, in Oslo, London and New York respectively.
Hydro has considered various transaction structures for the separation of Agri. The chosen structure of a demerger allows for a transfer of most of Agri’s value directly to Hydro’s shareholders. Hydro’s offering of the remaining 20 percent of Agri’s shares will contribute to effectively position the new company in the capital markets.
In order to contribute to Agri’s financial flexibility and allow for the establishment of share-based compensation systems, Hydro’s Board has proposed that Agri’s Board be authorized to issue up to 15 million new Agri Shares.
A demerger agreement between Hydro and AgriHold regulates the split of rights, assets and liabilities between the two companies. Hydro’s share capital will be split in the ratio of 91.5 percent/8.5 percent between Hydro and Agri, based on estimated fair market values and the proposed allocation of net interest-bearing debt and pension liabilities. The split ratio is based on a level of net interest-bearing debt of NOK 10.5 billion as of October 1, 2003. As NOK 2 billion was contributed in cash by Hydro at the formation of AgriHold, the net interest-bearing debt for AgriHold as of the same date is NOK 8.5.
The current Hydro Board of Directors will constitute the Board of Agri until the demerger is completed.
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Operating revenues for Agri for the period were NOK 27,891 million, or approximately 22 percent of Hydro’s total operating revenues. Agri’s operating income was NOK 1,829 million with EBITDA of NOK 3,240 million, representing approximately 11 percent of Hydro’s total operating income and EBITDA for the first nine months of the year.
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Net income for Agri for the first nine months of 2003 was NOK 1,265 million, which is approximately 18 percent of Hydro’s net income for the period.
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- Demerger information memorandum published: December 1, 2003
- Agri Capital Market Days: December 3-5, 2003
- Hydro Capital Market Day: December 11, 2003
- Hydro extraordinary general meeting: January 15, 2004
- Last trading date for Hydro Shares including AgriHold expected:
March 24, 2004
- Separate listing of Hydro Shares and AgriHold Shares expected:
March 25, 2004
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