Norsk Hydro To Buy Orkla's 50% Stake In Sapa JV For NOK 27 Bln - Quick Facts

(RTTNews) - Norwegian aluminium producer Norsk Hydro AS (NHY, NHYDY.PK, NHYDY.PK) Monday said it has agreed to acquire Orkla's 50 percent interest in Sapa joint venture for a total enterprise value of 27 billion Norwegian kroner.

Completion of the transaction is subject to approval from relevant competition authorities, and is expected in the second half of 2017.

Hydro expects the deal to be accretive to earnings and strong cash generation from Sapa from day 1.

The purchase price will be paid in cash at completion, adjusted for net debt and normalized working capital.

Following the transaction, Hydro said it is committed to retain its investment grade rating and a robust balance sheet. Hydro will maintain its dividend policy of returning 40 percent of net income over the cycle, with NOK 1.25 per share seen as a floor in 2017.

The deal will give Sapa's full ownership to Hydro. Sapa will become new business area in Hydro, named Extruded Solutions.

Hydro and Orkla combined their aluminium extrusion assets in 2013, forming a 50/50 joint venture. Sapa operates within the business areas Extrusion Europe, Extrusion North America, Precision Tubing and Building Systems, has 22,400 employees and is present in 40 countries.

The combination will make Hydro the only global company in the aluminium industry that is fully integrated across the value chain and markets.