Rottneros Shareholders Reject Arctic Paper's Bid
This past November 7, Arctic Paper S.A., Poland, announced its public offer to buy all of the shares in Rottneros AB of Stockholm, Sweden, and on the same day, the Rottneros Board of Directors recommended that shareholders accept the offer. The Rottneros board this week, however, reported that it has been informed in writing by shareholders (including Skagen Vekst and Peter Gyllenhammar via companies, that together control more than 10% of the capital and voting power in Rottneros), that they will not accept the Arctic Paper bid.
In view of this new information—which means that Arctic Paper's offer will not be accepted to an extent that it would obtain more than 90% and thereby be able to request the compulsory redemption of outstanding shares and consequently that a merger cannot be implemented—the Rottneros board made the following comments:
- The primary reason for the position adopted by the board of directors is that a merger of the two companies may be expected to generate synergies of approximately SEK 80 million and also that, from the perspective of both results and cash flow, a merger would balance out the two companies' very strong dependency on fluctuations in pulp prices. A precondition for realizing a substantial proportion of these synergies is that the companies are completely amalgamated and that one head office and one management group be phased out. In addition, synergies have been identified on the financial side, though this also presupposes that the companies join together. The other significant synergy includes the optimization of transport costs, that would probably be considerably more difficult to achieve if the companies continue to operate as autonomous businesses.
- The board's recommendation remains unchanged, i.e., that the companies merge to enable these synergies to be realized. The fact that two major owners controlling more than 10% of the capital and voting power have given notice that they will not accept the bid means in that event that a merger cannot be effected and that it would thus not be possible to secure most of these synergies.
Rottneros is a producer of market pulp. The group includes the parent company Rottneros AB and its subsidiaries Rottneros Bruk AB and Vallviks Bruk AB. The Group also includes the wood procurement company Rottneros Baltic SIA in Latvia. Rottneros has some 298 employees and had a turnover of approximately SEK 1.5 billion in 2011.
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