The agreement includes Profiles and Building System as well as Extruded and Welded tubes from Sapa, a 100% subsidiary of the Norwegian group Orkla, and the entire Extruded Products division from Hydro.

Based on the 2011 figures, the new joint venture's annual sales will be approximately NOK 47 billion, adjusted earnings (EBITDA) will be approximately NOK 1.9 billion, and the number of employees will be approximately 25,000 *. The new company will be a leader in Europe and North America, and will be strong in emerging markets including Brazil, Argentina, China, India and Vietnam.

The transaction is expected to close in the first half of 2013 as soon as the relevant competition authorities approve it. Svein Tore Holsether, currently managing director and CEO of Sapa, will also hold this position in the new company. Arnstein Sletmoe, currently head of Mergers & amp; Acquisitions at Hydro are appointed Chief Financial Officer of the merged company. Hydros CEO Svein Richard Brandtzæg becomes chairman of the board of directors in the joint venture. Sapa is headquartered in Oslo, Norway.

“Together we will create a stronger company with a wide range of skills and a very experienced management team. In today's challenging market situation, the joint venture is better positioned for restructuring and value creation. This strengthens Orkla's ability to successfully leverage the value of our aluminum business, "said Åge Korsvold, CEO of Orkla.

"The new company has the strength to face the challenging market conditions and create a platform for future growth in emerging markets," said Hydros CEO Svein Richard Brandtzæg. "This transaction helps Hydro as a global player to strengthen leading, resource-rich aluminum company with robust activities along the entire value chain. By partnering with Sapa, Hydro is establishing a new structure for its extrusion business that is now ready for better profitability and has potential for future growth, "he says.

Under the agreement, Hydro (through Hydro Aluminum AS) and Orkla (through Sapa Holding AB) will bring their relevant businesses into the new company by granting shares 50:50. To compensate for the size difference and to harmonize certain balance sheet items, Orkla will receive an additional NOK 1.8 billion from the new company in addition to the 50% stake. This amount is payable within six months of execution.

Both companies are currently carrying out significant improvement measures which, together with the estimated annual synergy effects of around NOK one billion, will further strengthen the new company. Global demand for aluminum is expected to continue to grow strongly.

“Aluminum is the material of the future. To meet the high demands of customers, we must continue to research & amp; Leading development, delivering precisely and optimizing our global presence. Both units have demonstrated their ability to improve quality and efficiency, and we are committed to combining the best of both companies in the joint venture, "said Svein Tore Holsether, CEO of Sapa.

The agreement contains provisions that allow the contracting party to seek an IPO approximately three years after the transaction is completed and where both may decide to retain 34 percent of the shares.

The new company is accounted for as an affiliate using the equity method.