Norsk Hydro, Orkla to Form Joint Venture

   By Dominic Chopping 
 

STOCKHOLM--Norwegian aluminum producer Norsk Hydro ASA (NHY.OS) and consumer goods conglomerate Orkla ASA (ORK.OS) said Monday they have agreed to join their profiles, building systems and tubing businesses as they react to toughening conditions and prepare for future emerging market growth.

The equal joint venture will be called Sapa. Based on 2011 numbers, it would have 47 billion kroner ($8.21 billion) in annual revenue and is expected to yield annual synergies of around NOK1 billion.

"The new company will have the necessary strength to meet current challenging markets and create a platform for future growth in emerging markets," Norsk Hydro Chief Executive Svein Richard Brandtzaeg said.

To compensate for the difference in size and to harmonize certain balance sheet items, Orkla will receive NOK1.8 billion from the new company in addition to its 50% ownership.

Completion of the transaction is expected to take place in the first half of 2013, and either party can initiate an initial public offering of the new company after three years from closing, with each party able to retain a 34% holding.

Write to Dominic Chopping at [e-mail]

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