Following the agreement between Norsk Hydro ASA and Orkla ASA to combine their respective aluminium extrusion businesses, the European Commission has expressed preliminary concerns regarding the possible competitive effects of the intended merger in certain markets.
The concerns relate to multi-port extrusions (MPE) in Europe and soft-alloy extrusions in the Nordic region, in this context defined as Norway and Sweden.
In response to the concerns expressed by the European Commission, Orkla and Hydro propose, if required, to divest Sapa's MPE business at Harderwijk in the Netherlands and Hydro's extrusion plant at Raufoss in Norway, including Hydro's affiliated fabrication plant in Vetlanda, Sweden.
The European Commission's initial review period will be extended until May 14, 2013. Provided that it approves the joint venture transaction subject to these conditions, a divestment process of the plants will be initiated.
The planned transaction between Hydro and Orkla has been approved by the U.S. Department of Justice and relevant competition authorities in several other jurisdictions. In addition to the clearance from the European Commission, completion of the transaction is also subject to approval by Chinese authorities.
Hydro and Orkla expect the planned joint venture transaction, retaining the company name Sapa, to be completed in the first half of 2013.
Certain statements included within this announcement contain forward-looking information, including, without limitation, those relating to (a) forecasts, projections and estimates, (b) statements of management's plans, objectives and strategies for Hydro, such as planned expansions, investments or other projects, (c) targeted production volumes and costs, capacities or rates, start-up costs, cost reductions and profit objectives, (d) various expectations about future developments in Hydro's markets, particularly prices, supply and demand and competition, (e) results of operations, (f) margins, (g) growth rates, (h) risk management, as well as (i) statements preceded by "expected", "scheduled", "targeted", "planned", "proposed", "intended" or similar statements.
Although we believe that the expectations reflected in such forward-looking statements are reasonable, these forward-looking statements are based on a number of assumptions and forecasts that, by their nature, involve risk and uncertainty. Various factors could cause our actual results to differ materially from those projected in a forward-looking statement or affect the extent to which a particular projection is realized. Factors that could cause these differences include, but are not limited to: our continued ability to reposition and restructure our upstream and downstream aluminium business; changes in availability and cost of energy and raw materials; global supply and demand for aluminium and aluminium products; world economic growth, including rates of inflation and industrial production; changes in the relative value of currencies and the value of commodity contracts; trends in Hydro's key markets and competition; and legislative, regulatory and political factors.
No assurance can be given that such expectations will prove to have been correct. Hydro disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.