Hydro announces bid for all the shares of Polish recycling firm Alumetal SA

On 29^th April 2022, the Norwegian aluminium company with its headquarters in Oslo, Norsk Hydro has announced a tender offer for the acquisition of 100% of the shares of Alumetal S.A, a company listed on the Warsaw Stock Exchange for 68.4 PLN per share in cash (the “offer price”), representing an aggregate equity purchase price of approximately 1.066 PLN million (approx. EUR 232 million).

Alumetal is one of the biggest, ultra-modern and constantly developing manufacturers of secondary aluminium casting alloys and primary alloys. However, the transaction oblique an Enterprise Value of approximately 1.332 PLN million (app. EUR 290 million) based on newly reported net debt as of FY2021 and dividends payable of 106 PLN million (app. EUR 23 million) dividend payment date on 27^th July 2022. Now, with this transaction, Hydro anticipates strengthening its recycling position in Europe and extending its product offering in the low-carbon and scrap-based foundry alloy market.

Furthermore securing competition clearance and controlling a minimum of 66% of outstanding shares, the tender offer will be accomplished subject to customary terms and conditions.

The leading industrial giant committed to a sustainable future, Hydro has finalized an agreement with two members of the Alumetal Supervisory Board and all members of the Alumetal Management Board, in total holding approximately 39% of the company’s shares, who have undertaken to submit subscriptions in the tender offer for all their shares at the offer price.

Hydro’s 2025 strategy targets to strengthen Hydro’s position in low-carbon aluminium by investing in recycling. Hydro has designed a 2025 strategic objective to double its recycling of post-consumer scrap (PCS) and to increase annual recycling EBITDA by a range of NOK 0.7 to 1.1 billion by 2025. The use of PCS significantly diminishes the CO2 footprint compared to pre-consumer/process scrap as well as primary aluminium.

The transaction announced that is announced on 29^th April 2022 is a crucial step in delivering on the 2025 strategic agenda. Following the acquisition of Alumetal, Hydro will increase the PCS usage by approximately ~150 ktpy, which together with freshly announced recycling projects; will support Hydro to meet its ambition to double PCS usage by 2025. The acquisition will provide an annual EBITDA uplift of EUR 47 million based on Alumetal’s 2021 financials.

The offer price represents a 4.7% premium over the closing price of the day before the announcement.

The subscription period for the tender offer is expected to commence on 13^th June 2022 and expire on 12 July 2022. Norsk Hydro reserves the right to extend the subscription period under the terms and conditions of the Tender Offer. The Management Board of the target is expected to issue an opinion before the commencement of the subscription period.

The second-largest producer of casting aluminium alloys in Europe, Alumetal has a production capacity of 275,000 tonnes per year with three plants in Poland and one in Hungary. The company sells its products primarily within Europe and to the automotive sector, which represents the largest customer group. Alumetal is also experienced in the sorting of post-consumer scrap (PCS) and is currently constructing a new, state-of-the-art sorting line.

Eivind Kallevik, the Executive Vice President of Hydro Aluminium Metal, “An acquisition of Alumetal is an exciting step towards delivering on our recycling strategy. We have been impressed by the development of the company over time, and by the quality of production, modern assets and the competence of management and employees. We look forward to bringing Alumetal into the Hydro family and joining forces to develop an even better offering of low-carbon recycled aluminium to our customers in the years to come.”