30/06/2009 - 11:23

Sylvania in $466m merger with Ruukki

30/06/2009 - 11:23

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Acquisitive Sylvania Resources has agreed to merge with a Finnish company in a deal valued at €268 million ($A466 million) to create an integrated producer of platinum group metals and ferrochrome.

Acquisitive Sylvania Resources has agreed to merge with a Finnish company in a deal valued at €268 million ($A466 million) to create an integrated producer of platinum group metals and ferrochrome.

The independent directors of Sylvania have agreed to the all-scrip merger with Ruukki Group, which will offer 1 of its shares for every 1.81 Sylvania shares.

Sylvania director Terry McConnachie was exempt from the merger decision due to his directorship at Ruukki.

The merger is not conditional on the success of Sylvania's takeover bids for Perth explorer SA Metals and Great Australian Resources, which Sylvania launched in May this year.

Both Sylvania targets have recommended the offer with Sylvania holding acceptances of 19.9 per cent in Great Australian and 12.55 per cent in SA Metals.

Sylvania is dual listed on the London's Alternative Investment Market.

A $3 million break fee is payable should the Sylvania and Ruukki merger not proceed.

The combined entity will retain the Ruukki Group name.

 

 

The announcement is below:

 

 

RUUKKI GROUP AND SYLVANIA RESOURCES ANNOUNCE PROPOSAL TO MERGE TO CREATE AN INTEGRATED MINE TO METALS PGM AND FERROCHROME COMPANY

Ruukki Group plc, a company incorporated in Finland, ("Ruukki") (RUG1V: OMX Helsinki) and Sylvania Resources Limited ("Sylvania") (SLV: ASX) today announce that they have entered into a merger implementation agreement pursuant to which Ruukki will acquire, subject to satisfaction of certain conditions, all of the issued and to be issued share capital of Sylvania under an Australian law governed scheme of arrangement between Sylvania and its shareholders (the "Sylvania Scheme").

Under the Sylvania Scheme each Sylvania Shareholder will receive 1 Ruukki share for every 1.81 Sylvania shares held on the Sylvania Scheme record date.

The Sylvania Scheme is not conditional on the success of Sylvania's off market takeover offer for all of the ordinary shares in SA Metals Limited (SXM: ASX) ("SA Metals") nor its off market takeover offer for all of the ordinary shares in Great Australian Resources Limited (GAU: ASX) ("Great Australian Resources" or "GAU") however it is conditional on the closing of those takeover offers 1.

Accordingly, the Sylvania Scheme will be put to Sylvania shareholders after the offers for SA Metals and GAU have both closed (regardless of the level of acceptances). Assuming the conditions of those offers are satisfied, SA Metals shareholders and GAU shareholders who accept the respective Sylvania takeover offers will receive Sylvania shares and will then have the opportunity to consider and vote on the Sylvania Scheme as Sylvania shareholders.

Transaction Highlights

The Sylvania Scheme has been unanimously recommended by the Ruukki independent directors and by each of the independent directors of Sylvania (being each of the directors of Sylvania other than Terry McConnachie who is also a director of Ruukki) in the absence of a superior proposal and subject to confirmation from the independent expert that the Sylvania Scheme is in the best interests of Sylvania shareholders.

The offer of 1 Ruukki share for each 1.81 Sylvania shares based on the Ruukki share price of EUR2.24 on the NASDAQ OMX Helsinki Ltd and a EUR:GBP exchange rate of 1.1758 on 29 June 2009 equates to an implied offer value of GBP1.05 per Sylvania share:

− a premium of 28% to the Sylvania share price of GBP0.82 on 29 June 2009;

− a premium of 36% to the Sylvania share price of GBP0.77 on 23 June 2009, the day prior to Sylvania's statement regarding press speculation; and

− a premium of 44% to the Sylvania 30 day volume weighted average price prior to 29 June 2009 of GBP0.73 per share.

Based on the closing price of Ruukki on the NASDAQ OMX Helsinki Ltd on 29 June 2009 of EUR2.24 per share, the Sylvania Scheme value is approximately EUR268 million2.

Once completed, the management team will consist of a combination of the executive management teams of Ruukki and Sylvania with current Ruukki CEO Alwyn Smit continuing in this role and Sylvania CEO Terry McConnachie assuming the role of Chief Executive Ruukki Minerals: PGM.

Details of the conditions of the Sylvania Scheme are included in Appendix I to this announcement.

Enlarged Group Strategy

The combination of Ruukki and Sylvania will create an integrated, mine to metals platinum group metals ("PGMs") and ferrochrome company (the "Enlarged Group").

The strategic rationale for the creation of the Enlarged Group includes:

Creating an integrated producer and processor of PGMs and ferrochrome.

Expanding existing profitable production by accessing:

− previously uneconomic high chrome low grade material in tailings dumps and current risings; and

− conventional ore deposits.

Applying the direct current ("DC") furnace technology which was co-developed with Mintek, South Africa's national mineral research organisation, and is currently available at Mogale Alloys.

Allowing the development of an alternative smelting and refining route to that currently available via the platinum majors.

Combining operational, technical and marketing expertise from across the PGM and ferrochrome industries.

The Enlarged Group would retain the name Ruukki Group plc.

Commenting on the agreement with Sylvania, Alwyn Smit, CEO of Ruukki, stated: "This transaction, following on from our recent acquisition of 84.9% of Mogale Alloys, represents a very significant step towards the realisation of our strategy to develop a fully integrated mine to metals PGM and ferrochrome business. The transaction with Sylvania is not conditional on the success of its offers for Great Australian Resources and SA Metals, however Ruukki is fully supportive of the offers and believes the two companies represent a strong fit with our strategic objectives."

Non-executive Chairman of Sylvania, Richard Rossiter stated: "The acceleration of our growth strategy and this proposed merger significantly enhances Sylvania's ability to target additional resources and maintain its low cost producer status."

Details of the Sylvania Scheme

- The Sylvania Scheme will be carried out by way of an Australian law governed scheme of arrangement pursuant to which eligible Sylvania shareholders will exchange 1.81 Sylvania shares owned on the Sylvania Scheme record date for each Ruukki share received.

- The Sylvania Scheme, in the absence of a superior proposal and subject to confirmation from an independent expert that the Sylvania Scheme is in the best interests of Sylvania's shareholders, has been recommended by the independent directors of Sylvania. The Sylvania Scheme has also been unanimously recommended by the independent Board of Directors of Ruukki.

- On completion of the Sylvania Scheme, Sylvania will become a wholly-owned subsidiary of Ruukki. Assuming that Sylvania acquires 100% of Great Australian Resources and SA Metals, Ruukki will have approximately 381 million shares issued and outstanding of which:

− 68.6% will be held by existing Ruukki shareholders; and

− 31.4% will be held by Sylvania shareholders.

Full details of the Sylvania Scheme will be included in a Scheme Booklet including a Notice of Meeting, Explanatory Statement and independent expert's report to be filed and lodged with the regulatory authorities and mailed to Sylvania shareholders in accordance with applicable securities legislation, expected to be in December 2009.

For the Sylvania Scheme to become effective a resolution in favour of the Sylvania Scheme must be passed at a court convened meeting of Sylvania's shareholders. The resolution must be passed by a majority in number of Sylvania's shareholders present and voting (in person or by proxy) and by 75% of the votes cast on the resolution.

The Sylvania Scheme also requires approval by two thirds of the votes cast and shares represented at Ruukki's extraordinary meeting of shareholders to be held on or about October 2009.

In addition to shareholder approval by Sylvania's shareholders, the Scheme is conditional upon, among other things, all necessary regulatory approval having been obtained. However, the Scheme is not conditional upon the outcome of the offers by Sylvania for SA Metals and Great Australian Resources completing, and each of these offers will be consummated as separate transactions.

A break fee of AUD3.0m is payable to either party under certain circumstances if the Sylvania Scheme does not proceed.

The Sylvania Scheme is currently expected to close no later than 30th April 2010.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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