Valmet and Rauma to merge

Valmet Corp. and Rauma Corp. announced a merger that will form by far the world's largest supplier of pulp and paper equipment. The new company, Valmet-Rauma, will be a global market leader in all its main product groups, supplying equipment spanning the entire forest products process industry, from forest harvesting to paper and board converting, the companies report.Valmet is the world's largest supplier of a wide range of products for the paper industry, notably paper machines, coaters and finishing equipment such as calenders and winders. Valmet delivered 11 new paper machines in both 1997 and 1996.

Rauma produces a wide array of products and is organized around four major divisions. The largest division is the pulp mill equipment producer Sunds Defibrator. Based on 1997 data, about 35% of Sunds' sales were derived from chemical pulping processes and 19% from mechanical pulping. Others divisions are Neles Controls (valves and flow control svstems),Timberjack (forest harvesting) and Nordberg (rock crushing).

The merger will create a company with combined 1997 sales of $4.2 billion (FIM 23 billion), an operating profit of $311 million (FIM 1.7 billion) and a combined 23,496 employees. Completion of the merger is expected to be in June 1999. The merger is expected to save an estimated FIM 400 million annually, which will bc fully realized beginning in 201. The new company's Chairman of the Board will be Pertti Voutilainen. Matti Sundberg, CEO of Valmet, will be the CEO of the new company. Heikki Hakala, CEO of Rauma Corp, will be president.

This is the latest in a series of mergers and acquisitions that are changing the producer and supplier sides of the paper industry. Earlier in the fall, the merger of Hercules and BetzDearborn radically changed the specialty chemical area.

Copyright Miller Freeman Inc. Jan 1999
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