Valmet Oyj — M&A Activity 2022

Mar 22, 2022

Valmet Oyj and Neles Corporation have resolved on the completion of the merger conditional on the extra distribution of funds of Neles and entered into a loan agreement concerning such distribution

Valmet Oyj and Neles Corporation have resolved on the completion of the merger conditional on the extra distribution of funds of Neles and entered into a loan agreement concerning such distribution

Valmet Oyj and Neles Corporation have resolved on the completion of the merger
conditional on the extra distribution of funds of Neles and entered into a loan
agreement concerning such distribution

Valmet Oyj’s stock exchange release on March 22, 2022 at 7:15 p.m. EET

NOT FOR PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY, IN OR INTO AUSTRALIA, CANADA, HONG KONG, SOUTH AFRICA, SINGAPORE,
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DISTRIBUTION WOULD VIOLATE APPLICABLE LAWS OR RULES OR WOULD REQUIRE ADDITIONAL
DOCUMENTS TO BE COMPLETED OR REGISTERED OR REQUIRE ANY MEASURE TO BE UNDERTAKEN
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 Valmet and Neles will merge creating a leading company with a unique
offering for process industries globally (the “Merger”). As announced on March
21, 2022, Valmet and Neles have received all competition approvals for the
Merger. The Boards of Directors of Valmet and Neles have today also concluded
that all other conditions to completion of the Merger aside from the extra
distribution of funds of Neles have been fulfilled or waived and resolved to
complete the Merger in accordance with the merger plan and combination agreement
entered into on July 2, 2021, conditional on the extra distribution of funds of
Neles having been resolved by the Board of Directors of Neles later today on
March 22, 2022 and executed prior to the completion of the Merger. Provided that
the extra distribution will have been executed, the execution of the Merger is
expected to be registered at the Finnish Trade Register on April 1, 2022.

Issuing of new Valmet shares as merger consideration to the shareholders of
Neles

As merger consideration, the shareholders of Neles will receive 0.3277 new
shares in Valmet for each share they hold in Neles at the end of March 31, 2022.
After the completion of the Merger, shareholders of Neles would own
approximately 18.8 percent of the shares and votes of the combined company and
shareholders of Valmet would own approximately 81.2 percent of the shares and
votes of the combined company. The total number of the new shares in Valmet to
be issued in connection with the Merger is expected to be 34,664,986 shares,
resulting in 184,529,605 shares in total in Valmet. The share capital of Valmet
shall be increased by EUR 40,000,000 to EUR 140,000,000 in connection with the
registration of the execution of the Merger. The merger consideration shares are
intended to be registered at the Finnish Trade Register on April 1, 2022 and
registered on the book-entry accounts of Neles’ shareholders on April 1, 2022.

Trading in the new shares on the official list of Nasdaq Helsinki Ltd (“Nasdaq
Helsinki”) is expected to commence on April 1, 2022. Valmet’s shares continue to
be subject to trading on Nasdaq Helsinki under the trading code VALMT (ISIN
code: FI4000074984). The last day of trading and listing of the shares in Neles
on Nasdaq Helsinki is expected to be March 31, 2022.

In case the number of merger consideration shares received by a shareholder of
Neles per each individual book-entry account is a fractional number, the
fractions shall be rounded down to the nearest whole number. Fractional
entitlements to the merger consideration shares shall be aggregated and sold in
public trading on Nasdaq Helsinki, and the proceeds shall be distributed to
shareholders of Neles entitled to receive such fractional entitlements in
proportion to their holding of such fractional entitlements.

Neles’ extra distribution of funds and related party loan agreement

Based on the combination agreement between Neles and Valmet regarding the
Merger, Neles may prior to the execution of the Merger distribute to its
shareholders an extra distribution of funds in the amount of up to EUR 2.00 per
share either as dividend or return of equity from Neles’ fund for invested
unrestricted equity or a combination of the two (the “Extra Distribution”). The
Annual General Meeting of Neles held on March 22, 2022 resolved to authorize
Neles’ Board of Directors on the aforementioned Extra Distribution.

The Extra Distribution is expected to be resolved by the Board of Directors of
Neles later today on March 22, 2022. Neles and Valmet will publish a stock
exchange release upon such resolution having been made.

The Boards of Directors of Valmet and Neles have today approved a loan agreement
between the companies concerning the part of the Extra Distribution payable to
Valmet (the “Loan Agreement”). According to the Loan Agreement, the part of the
Extra Distribution payable to Valmet as a shareholder of Neles will not be paid
in cash to Valmet in connection with payment of the Extra Distribution to other
shareholders of Neles, but the amount payable to Valmet will be recorded as debt
owed by Neles to Valmet. For an Extra Distribution amounting to EUR 2.00 per
share the value of the loan agreement would be approximately EUR 88.8 million.

As a consequence of the completion of the Merger, all the assets and liabilities
of Neles will transfer to Valmet and therefore, the loan under the Loan
Agreement will extinguish upon the completion of the Merger. If the Merger
cannot be completed before the long-stop date defined under the combination
agreement between Neles and Valmet, Valmet has a right to request repayment of
the loan. Said loan carries an interest of 0.5% per annum as of the date of the
payment of the Extra Distribution to other shareholders of Neles.

The Loan Agreement constitutes a related party transaction for Neles and Valmet,
as Valmet is the largest shareholder of Neles with its approximately 29% share
ownership in Neles.

Composition of the Board of Directors and other resolutions of the General
Meetings of Valmet relating to the Merger

In accordance with the resolutions of the Extraordinary General Meeting of
Valmet held on September 22, 2021 (the “EGM”) and the Annual General Meeting of
Valmet held on March 22, 2022 (the “AGM”), the Board of Directors of Valmet will
consist of current Valmet Board members Aaro Cantell, Pekka Kemppainen, Per
Lindberg, Monika Maurer, Mikael Mäkinen and Eriikka Söderström and current Neles
Board members Jaakko Eskola and Anu Hämäläinen.

Mikael Mäkinen, currently the Chairman of the Board of Directors of Valmet, will
continue to act as the Chairman of the Board of Directors and Jaakko Eskola,
currently Chairman of the Board of Directors of Neles, will act as the Vice
Chairman of the Board of Directors of Valmet.

The term of the new Board of Directors will commence on the date of the
registration of the execution of the Merger with the Finnish Trade Register (the
“Effective Date”) and expire at the close of the Annual General Meeting 2023 of
Valmet.

The resolutions of the EGM regarding the amendment of Valmet’s Articles of
Association and certain other matters set out in the merger plan will take
effect on the Effective Date of the Merger.

In addition, the AGM of Valmet resolved on the remuneration of the members of
the Board of Directors as of the Effective Date.

As announced by Valmet on October 26, 2021, Simo Sääskilahti will start as the
Business Line President, Flow Control of Valmet as of the completion of the
Merger.

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 2021 were approximately EUR 3.9 billion. Our more than 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 611 million in 2021. Neles employs about
2,950 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 or
an Annual General Meeting 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 General Meeting 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.

This release may include estimates relating to the synergy benefits expected to
arise from the Merger and the combination of the business operations of Valmet
and Neles as well as the related integration costs, which have been prepared by
Valmet and Neles and are based on a number of assumptions and judgments. Such
estimates present the expected future impact of the Merger and the combination
of the business operations of Valmet and Neles on the combined company’s
business, financial condition and results of operations. The assumptions
relating to the estimated synergy benefits and related integration costs are
inherently uncertain and are subject to a wide variety of significant business,
economic, and competitive risks and uncertainties that could cause the actual
synergy benefits from the Merger and the combination of the business operations
of Valmet and Neles, if any, and related integration costs to differ materially
from the estimates in 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.