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Hydro fully acquires Sapa to create a global aluminum company fully integrated across value chain and markets

Norsk Hydro will acquire Orkla’s 50% interest in Sapa—a 50/50 joint venture between Orkla and Hydro formed in 2013, and the world’s largest aluminum extrusion company. The transaction gives Sapa a total enterprise value of NOK 27 billion (US$3.24 billion). Sapa will become a new business area in Hydro named Extruded Solutions. Anticipated closing of the transaction is in the second half of 2017.

The combination will make Hydro the only global company in the aluminum industry that is fully integrated across the value chain and markets. Hydro will have strength in technology, R&D, innovation and product development, as well as a product and service offering for more than 30,000 customers throughout the world.

Hydro is now confirming its position as the world’s leading integrated aluminum company and the transaction reinforces our strategic direction Better, Bigger and Greener, with a solid asset base, unique competencies and capabilities from mining to end-user products. Sapa will enable us to assume global leadership, establish a platform for growth, and provide responsible operations and sustainable solutions for the future low-carbon economy.”

—Svein Richard Brandtzæg, President and CEO of Hydro

After Hydro and Orkla combined their aluminum extrusion assets in 2013, the two companies have consistently supported the Sapa joint venture’s progress towards higher performance and value creation through streamlining and improving its global operations.

Following the transaction, Hydro will become a global, integrated aluminum company with more than 35,000 employees, and activities in around 40 countries. Hydro’ rolled products business has a strong market presence throughout product segments in Europe. Sapa is the global extrusion champion, with strong market shares in North America and Europe, and is the global leader in precision tubing.

Hydro also has solid market presence in metal products across the value-added metal product categories in Europe, North-America and Asia, and is Norway’s second-largest producer of renewable hydropower. With long positions in bauxite and alumina, Hydro is among the global leaders in the third-party bauxite and alumina market outside China.

The transaction will be financed through cash positions and issuance of bonds in Norwegian and international markets, and will be temporarily funded by committed undrawn credit lines. Following the transaction, Hydro is committed to retain its investment grade rating and a robust balance sheet. Hydro will maintain its dividend policy of returning 40% of net income over the cycle, with NOK 1.25 (US$0.15) per share seen as a floor in 2017.

The purchase price will be paid in cash at completion, adjusted for net debt and normalized working capital.


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