Finland-based pipe maker Uponor Oyj has rejected an offer from Aliaxis SA of Brussels to buy the company and add it to plastics pipe manufacturing operations.
Aliaxis — the owner of Ipex USA LLC of North Carolina, one of the five largest pipe, profile and tubing makers in North America — made an unsolicited bid to buy Uponor on April 17.
Uponor's largest shareholder, Oras Invest, already turned down the offer price of 25 euros per share, saying it didn't reflect the company's value. Uponor board members officially rejected the bid on April 26.
Uponor makes high density polyethylene and cross-linked PE (PEX) pipes.
The Uponor board remains focused on pursuing the company's strategy, according to member Hans Sohlström.
"It believes that Uponor enjoys strong performance under its new management, and, with its recently renewed strategy, has a strong position for future profitable growth," Sohlström said in a news release.
The board will evaluate any further proposals made by Aliaxis or any other party, Sohlström added.
In the meantime, Aliaxis's ownership as a shareholder is growing. The company doubled its share ownership in Uponor between April 17 and 21 and it now holds about 10.56 percent of all Uponor shares — up from about 5 percent of Uponor's issued and outstanding shares as of April 14.
"We are now the second largest shareholder of Uponor, with over 10 percent of all outstanding shares," Aliaxis CEO Eric Olsen said in a news release. "Aliaxis is a responsible long-term industrial owner sharing both similarities and complementaries with Uponor. Our potential offer could bring scale and scope to all stakeholders in Finland and internationally. We look forward to constructively engaging with ... Uponor regarding our potential offer."
In a 40-minute webcast April 17, Olsen made a public appeal to Uponor's board directors and shareholders. He talked about the opportunity for complementary market positions, limited overlap and synergies that could be achieved mainly from cross-selling.
"Our potential offer is about growth with purpose, scale, innovation, smart fluid management solutions and a long-term focus for the benefit of all stakeholders," Olsen said.
For example, Uponor operates primarily in the Nordic region and Eastern Europe with a focus on residential building markets for potable water and radiant heating while Aliaxis primarily operates in western and southern Europe with a focus on building drains and waste and other markets.
Aliaxis also owns Ipex USA LLC of North Carolina, one of the five largest pipe, profile and tubing makers in North America.
A merging would improve product lines for both companies and give them a chance to address the world's water challenges through greater market presence, know-how and operational capabilities, Olsen said.
"Uponor has deep expertise in the building segment with hot and cold offerings and in surface heating and cooling while we offer other fluid management solutions to the building segment and we're also active in the infrastructure industry and agriculture segments as well," Olsen said.
The latest Aliaxis offer price of 25 euros cash for outstanding shares would have valued Uponor at 1.82 billion million euros ($2 billion), which represents 44.6 percent of the April 14 closing price of 16.64 euros on the Nasdaq Helsinki.
The potential offer came on the heels of a 2022 proposal that was rejected and it preceded the release of Uponor's first quarter financial results, which show sales decreased to 329.4 million euros ($349.5 million) from January through March 2023, which is a decrease of 5.8 percent from the same period last year.
Still, Uponor Corp. President and CEO Michael Rauterkus describes the first quarter performance as solid.
"Margin resilience was visible in all divisions' performance during the quarter," Rauterkus said in a news release.
He pointed to Uponor's division for Building Solutions in Europe as having a stable operating margin even though sales decreased due to lower underlying demand and the absence of sales from the Russian operation, which was sold on March 1.
Uponor's building solutions division in North America's also is stable and supported by a strong order book at the end of 2022, Rauterkus said.
"There are strong megatrends driving mid-and long-term demand for sustainable and energy-efficient heating and cooling systems as well as systems for safe and clean water in our markets," he added. "However, in the near term, we are prepared for high market volatility and a soft demand picture in the construction sector impacted by the effects of the war in Ukraine, the rise in interest rates and high inflation."
Uponor also is making progress on its journey to be a leaner more resilient company, Rauterkus said.
"The actions implemented so far within the program are already expected to generate annualized savings of €14.4 million of the total targeted €30 million cost savings by the end of 2024," he said.