Valmet Oyj — M&A Activity 2021

Sep 2, 2021

The Finnish Supervisory Authority has approved the merger prospectus concerning the combination of Valmet Oyj and Neles Corporation

The Finnish Supervisory Authority has approved the merger prospectus concerning the combination of Valmet Oyj and Neles Corporation

The Finnish Supervisory Authority has approved the merger prospectus concerning
the combination of Valmet Oyj and Neles Corporation

Valmet Oyj’s stock exchange release on September 2, 2021 at 12.00 p.m. EEST

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IN ADDITION TO THE REQUIREMENTS UNDER FINNISH LAW. SEE “IMPORTANT NOTICE” BELOW.

Valmet Oyj (“Valmet”) and Neles Corporation (“Neles”) announced on July 2, 2021
that the Boards of Directors of Valmet and Neles have agreed upon the
combination of the two companies by signing a combination agreement and a merger
plan (the “Merger Plan”), according to which Neles shall be merged into Valmet
through a statutory absorption merger in accordance with the Finnish Companies
Act whereby all assets and liabilities of Neles shall be transferred without a
liquidation procedure to Valmet (the “Merger”). The shareholders of Neles shall
receive new shares in Valmet in proportion to their shareholdings in Neles as
merger consideration (the “Merger Consideration Shares”). On August 9, 2021, the
Boards of Directors of Valmet and Neles have proposed that the Extraordinary
General Meetings of Valmet and Neles, convened to be held on September 22, 2021,
resolve upon the Merger as set forth in the Merger Plan.

The Finnish Financial Supervisory Authority has approved today, September 2,
2021, the Finnish language merger prospectus concerning the Merger (the “Merger
Prospectus”) prepared for the issuance of the Merger Consideration Shares to
Neles’ shareholders. An English language translation of the Merger Prospectus
(the “English Merger Prospectus”) and a Swedish language translation of the
summary of the Merger Prospectus will be notified to the financial supervisory
authority in Sweden.

The Merger Prospectus, the English Merger Prospectus and the Swedish language
translation of the summary of the Merger Prospectus will be available starting
on or about September 2, 2021 on Valmet’s website at www.valmet.com/merger and
on Neles’ website at www.neles.com/merger. Furthermore, the Merger Prospectus
and the English Merger Prospectus will be available starting on or about
September 7, 2021 at Valmet’s registered office at Keilasatama 5, FI-02150
Espoo, Finland and at Neles’ registered office at Vanha Porvoontie 229, FI-01380
Vantaa, Finland. In addition, the Merger Prospectus will be available starting
on or about September 7, 2021 at the reception of Nasdaq Helsinki at
Fabianinkatu 14, FI-00100 Helsinki, Finland.

The English Merger Prospectus contains the following previously unpublished
information in relation to the Merger (any capitalized terms not defined in the
following shall have the meanings assigned to them in the English Merger
Prospectus):

Pro forma financial information

The English Merger Prospectus includes the unaudited pro forma combined
financial information (the “Pro Forma Information”) presented for illustrative
purposes only to give effect to the Merger of Valmet and Neles to Valmet’s
financial information as if the Merger had been completed at an earlier date.
The Pro Forma Information included in the English Merger Prospectus has been
attached in full as Annex 1 to this stock exchange release.

The pro forma statements of income for the six months ended June 30, 2021 and
for the year ended December 31, 2020 give effect to the Merger as if it had
occurred on January 1, 2020. The pro forma statement of financial position as at
June 30, 2021 gives effect to the Merger as if it had occurred on that date. The
Pro Forma Information is unaudited.

The Pro Forma Information has been presented for illustrative purposes only. The
hypothetical financial position and results included in the Pro Forma
Information may differ from the Combined Company’s actual financial position and
results. Further, the Pro Forma Information does not purport to project the
financial position or results of the Combined Company as of any future date. In
addition, the Pro Forma Information does not reflect any cost savings, synergy
benefits or future integration costs that are expected to be generated or may be
incurred as a result of the Merger. The Pro Forma Information has been compiled
in accordance with the Annex 20 to the Commission Delegated Regulation (EU)
2019/980, and on a basis consistent with the accounting principles applied by
Valmet in its consolidated financial statements prepared in accordance with
IFRS.

The Merger will be accounted for as a business combination in accordance with
the acquisition method of accounting under the provisions of IFRS with Valmet
determined as the acquirer of Neles. As Valmet holds an equity interest in Neles
prior to the Merger, the Merger is accounted for as a business combination
achieved in stages. In the Merger, Valmet’s previously held equity interest in
Neles will be remeasured to fair value at the Effective Date and a gain or loss
will be recognized in the consolidated statement of income of Valmet at the
Effective Date. The purchase consideration will include fair value of the Merger
Consideration and fair value of Valmet’s previously held equity interest in
Neles.

The Pro Forma Information reflects adjustments to the historical financial
information to give pro forma effect to events that are directly attributable to
the Merger and are factually supportable. The pro forma adjustments include
certain assumptions related to the fair value of the purchase consideration, the
fair valuation of the net assets acquired, accounting policy alignments,
financing arrangements and other events related to the Merger, that the
management believes are reasonable under the circumstances. Considering the
ongoing regulatory approval processes which restrict Valmet’s access to detailed
data of Neles and the fact that the final accounting measures of the Merger can
only be done at the Effective Date, the pro forma adjustments presented are
preliminary and based on information available at this time. The Pro Forma
Information is subject to change, among others, due to the final fair value of
the Merger consideration and Valmet’s previously held equity interest in Neles
being determined based on the then-current fair value of Valmet’s share as at
the Effective Date and the final purchase price allocation being based on the
fair values of Neles’ assets acquired and liabilities assumed as at the
Effective Date. Further, Valmet is able to conduct a detailed review of Neles’
accounting policies only after the Effective Date due to restrictions on
information sharing before the Merger.

There can be no assurance that the assumptions used in the preparation of the
Pro Forma Information or presenting Neles’ financial information in the Pro
Forma Information in Valmet’s presentation format will prove to be correct. The
actual results of the Merger may materially differ from the assumptions used and
the pro forma adjustments reflected in the Pro Forma Information. Further, the
accounting policies to be applied by the Combined Company in the future may
differ from the accounting policies applied in the Pro Forma Information.

The following table sets forth a summary of key figures relating to Pro Forma
Information as at the dates and for the periods indicated. The information is
unaudited unless otherwise indicated.

[][][][][]

As at and For the

for the year ended

six months December

ended June 31, 2020

30, 2021
EUR million, unless otherwise indicated
Valmet Neles Merger Combined Valmet Neles Merger Combined

historical reclas Company historical reclas Company

-sified pro -sified pro

forma forma

Net
1,801 275 -7 2,069 3,740[1)] 576 -15 4,301
sales............................................................................
.................................................................................
..........
Comparable
EBITA............................................................................
..........................................................................
175 35 -0 210 365 85 -1 449
Operating
profit...........................................................................
.................................................................................
161 32 -17 176 319[1)] 70 14 403
Profit for the
period...........................................................................
...........................................................................
121 22 -13 131 231[1)] 48 45 324
Basic earnings per share,
EUR..............................................................................
................................................... 0.81
0.71 1.54[1)] 1.76
Total
4,144 648 1,532 6,325
assets...........................................................................
.................................................................................
......
Total
1,144 259 1,100 2,503
equity...........................................................................
.................................................................................
.......
Net interest-bearing
liabilities......................................................................
...............................................................
-9 88 242 320

______________________

[1) ]Audited.

VALMET OYJ
Board of Directors

For further information, please contact:

Pekka Rouhiainen, Director, Investor Relations, Valmet, tel. +358 10 672 0020

DISTRIBUTION:
Nasdaq Helsinki
Major media
www.valmet.com

Information on Valmet and Neles in brief

Valmet is a leading global developer and supplier of process technologies,
automation and services for the pulp, paper and energy industries. We aim to
become the global champion in serving our customers. Valmet’s strong technology
offering includes pulp mills, tissue, board and paper production lines, as well
as power plants for bioenergy production. Our advanced services and automation
solutions improve the reliability and performance of our customers’ processes
and enhance the effective utilization of raw materials and energy. Valmet’s net
sales in 2020 were approximately EUR 3.7 billion. Our 14,000 professionals
around the world work close to our customers and are committed to moving our
customers’ performance forward – every day. Valmet’s head office is in Espoo,
Finland and its shares are listed on the Nasdaq Helsinki.

Neles is one of the leading providers of mission-critical flow control solutions
and services for process industries. With our global team of experts and
innovative solutions, we help our customers to improve their process performance
and ensure the safe flow of materials. Neles is listed on the Nasdaq Helsinki in
Finland and had sales of about EUR 576 million in 2020. Neles employs about
2,850 people in approximately 40 countries.

Important notice

In a number of jurisdictions, in particular in Australia, Canada, Hong Kong,
South Africa, Singapore, Japan and the United States, the distribution of this
release may be subject to restrictions imposed by law (such as registration of
the relevant offering documents, admission, qualification and other
regulations). In particular, neither the Merger Consideration Shares nor any
other securities referenced in this release have been registered or will be
registered under the United States Securities Act of 1933, as amended (the
“Securities Act”) or the securities laws of any state of the United States and
as such neither the Merger Consideration Shares nor any other security
referenced in this release may be offered or sold in the United States except
pursuant to an applicable exemption from registration under the Securities Act.
There will be no public offering of securities in the United States.

This release is neither an offer to sell nor the solicitation of an offer to buy
any securities and shall not constitute an offer, solicitation or sale in the
United States or any other jurisdiction in which such offering, solicitation or
sale would be unlawful. Save as required by applicable law or regulation, this
release must not be forwarded, distributed or sent, directly or indirectly, in
whole or in part, in or into the United States, or otherwise in or into any
jurisdiction where the distribution of these materials would breach any
applicable law or regulation, or would require any registration or licensing
within such jurisdiction. Failure to comply with the foregoing limitation may
result in a violation of the Securities Act or other applicable securities laws.

This release does not constitute a notice to an Extraordinary General Meeting
(“EGM”) or a merger prospectus. Any decision with respect to the Merger of Neles
into Valmet should be made solely on the basis of information contained in the
actual notices to the EGM of Valmet and Neles, as applicable, and the Merger
Prospectus or English Merger Prospectus as well as on an independent analysis of
the information contained therein. You should consult the Merger Prospectus or
English Merger Prospectus for more complete information about Valmet, Neles,
their respective subsidiaries, their respective securities and the Merger.

This release contains forward-looking statements. All statements other than
statements of historical fact included in this release are forward-looking
statements. Forward-looking statements give the combined company’s current
expectations and projections relating to its financial condition, results of
operations, plans, objectives, future performance, benefits of the Merger, and
business. These statements may include, without limitation, any statements
preceded by, followed by or including words such as “expect”, “aim”, “intend”,
“may”, “plan”, “would”, “could”, and other words and terms of similar meaning or
the negative thereof. Such forward-looking statements involve known and unknown
risks, uncertainties and other important factors beyond the combined company’s
control that could cause the combined company’s actual results, performance or
achievements to be materially different from the expected results, performance
or achievements expressed or implied by such forward-looking statements. Such
forward-looking statements are based on numerous assumptions regarding the
combined company’s present and future business strategies and the environment in
which it will operate in the future. Shareholders should not rely on these
forward-looking statements. Neither Valmet nor Neles, nor any of their
respective affiliates, advisors or representatives or any other person
undertakes any obligation to review or confirm or to release publicly any
revisions to any forward-looking statements to reflect events that occur or
circumstances that arise after the date of this release. Further, there can be
no certainty that the Merger will be completed in the manner and timeframe
described in this release and the Merger Prospectus, or at all.

ANNEX 1: Pro Forma Information

Attachments: