By: Richard Higgs
EUROPEAN PLASTICS NEWS
June 5, 2013
A special commercial court in Finland has given conditional approval to the merger of the infrastructure solutions businesses of two Finnish plastics pipe producers, Uponor and KWH Group.
The Market Court's consent to the formation of Uponor Infra Oy, a jointly owned enterprise to run the businesses, is subject to two conditions: the new firm must offer contract manufacturing of selected product ranges, up to agreed volumes, to other Finnish market pipe producers and sell off seven specified extrusion lines. Uponor and KWH have agreed to the conditions.
The court ruling reverses an earlier decision to block the merger by the Finnish Competition and Consumer Authority (FCCA). The competition authority now has until 24 June to appeal against the court's decision at Finland's High Administration Court of Justice.
Last September, the two groups announced their intention to consolidate the operations of subsidiaries KWH Pipe Ltd and Uponor Infrastructure Solutions in the new joint venture. They said the merger was prompted by intense competition and falling demand resulting from the prolonged global economic crisis.
Uponor Infra will be majority owned by Uponor of Vantaa, Finland with a 55.3 percent stake while Vaasa-based KWH Group will hold the remaining 44.7 percent share in the enterprise.
Both groups warmly welcomed the court ruling. "We are excited about being able to begin implementing our plan, in which both Uponor and KWH Group have invested a great deal of effort and resources.
"I am sure this merger will enhance our leadership in the infrastructure segment with a wider customer base, a broader offering and an extended geographical reach," commented Uponor president and CEO Jyri Luomakoski.
His opposite number at KWH Group, Peter Höglund, said the merger with Uponor is "the best strategic way forward for KWH Pipe's further development". The combined businesses will benefit from "considerable synergy effects", he added.
The deal is set to yield annual integration benefits of around 10 million euros once the synergies are fully implemented, the partners said. Depending on any FCCA appeal, the transaction will be be closed in time for the new company to start operating after 1 July.
The groups agreed that initially, the executive vice president of Uponor Infrastructure Solutions, Sebastian Bondestam will manage the integration process until Uponor Infra's management is fully announced.