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Article Excerpt
Original Source: FD (FAIR DISCLOSURE) WIRE
OPERATOR: Good afternoon, ladies and gentlemen, and welcome to today's NA investor relations conference call. For your information, this conference is being recorded. At this time, I would like to turn your call over to your host today, Mr. Dr. Marnette. Please go ahead, sir.
DR. WERNER MARNETTE, CEO, DIRECTOR-LABOR AFFAIRS, NORDDEUTSCHE AFFINERIE AG: Yes, good afternoon. This is Werner Marnette. I'm talking to you from Brussels for reasons which are well known to you. I am happy that you are joining our phone conference. And I would like to first to run through the story again, and after that, we are happy to answer your questions.
Again, we have announced, from my point of view, an excellent deal for the takeover of Cumerio. The offer price was EUR30 per Cumerio share in cash. This represents a premium of 28.5% to the closing share price on the 21st of June 2000, and a 29.8% premium to the volume weighted average share price over the past three months until 21st of June.
So far, to the transaction, what is the rationale? The rationale is the creation of an international leader in the copper sector and a growth platform beyond Europe. It's a unique strategic fit for a complementary geographic setup of activities in western and southeastern Europe. We strongly believe that we have a strong industrial logic, with significant potential to optimize utilization and productivity of facilities. The combination brings benefit to shareholders, customers and employees, becoming a much stronger business unit technologically, strategically, as well as financially.
Let me first give some comments about the actual financial situation of Norddeutsche Affinerie. We are still in a very positive business year. You know that we are going to publish our quarterly results by mid-August. But what I see from today, this will be an excellent business year, an outstanding one, that is fully aligned with what we have published in the first quarter and for the second half of the year.
What we are presenting today and what we have given to the market is a very important strategic step, which fully fits into what we have communicated to the market; that means an increase of our capacity from roughly 550,000 tons of cathodes to 1 million tons of cathodes per year. We had said this by extension our international projects, and on copper processing, increasing our capacity from 830,000 tons to about 1.1 million tons, both this by extension and international projects. With the strategic move which we have done today -- want to do -- we are fulfilling this strategic target.
But those step is not only giving -- let's say, leads to consolidation and gives a good platform for growth, based on the very strong cash flow generation in both companies and in the united company, but it will give us the power to invest in other areas of the world, growing areas, for instance, like South America or Asia. NA is in an excellent position to make such a step in terms of operational excellence. We have fantastic operation performance, we have the financial power to make such a deal, and we are prepared to make something out of this.
Who is Cumerio? Cumerio is the merged company, originally being part of Umicore, the Belgian metals group. Cumerio is likewise an integrated copper producer and processor, like NA. Their business fields are relatively similar, apart from the strip production facilities which Norddeutsche Affinerie has. Cumerio has roughly 1,500 people at work, of which 800 people are working in Bulgaria, about 500 in Belgium, and 100 in Italy.
Cumerio is a European company with attractive production sites, with sites in Belgium, in Olen. There, the center of cathode production is located and the wire rod production. They have a wire rod plant in Italy, in Avellino, and smaller activity in Switzerland. But what is the future -- the future orientation of Cumerio is the southeast area of Europe, combined with the Bulgarian Pirdop smelter, which is based on concentrate treatment with the Outokumpu Technology, as NA is operating it in Hamburg.
So in principle, similar structure of the company, but internationally, European -- in the European way, that are positioned in Norddeutsche Affinerie. Cumerio is producing about 500,000 tons of copper product per annum. NA is producing roughly 830, 850. Cumerio has a very successful business performance in terms of EBIT and revenue development. And with regards to the share price development, Cumerio has 25.7 million shares spread.
Wee see in Cumerio a company, a strong company, with further potential for development. We have similar and comparable techniques. And of course, in the united company, we could use to benchmark us and to come to better operational results. We have the advantage with Pirdop of lower sector costs with regard to personnel and energy. And we see that Cumerio has further chances to develop its excellence in the operations by far.
What we are going to do with the takeover, which in the philosophy is a merger, because Norddeutsche Affinerie management team and Cumerio management want this happens to create a leading integrated producer and processor of copper. And of course, we are targeting to value-added and finally to produce a growth platform.
The combination of NA and Cumerio takes stakeholders interest into account. That means we have a well understanding about the structure of the company in the future. For example, two Cumerio senior executives will join the NA board of management. Hamburg will remain the group headquarters of the new NA. Brussels will be the registered office of a service company. That means the group will have certain service functions in Brussels. We are targeting of converting the AG into an SE in the medium-term, which gives the company more flexibility in different ways and gives an indication that we are strongly targeting to internationalize our business. And we have -- NA has offered two independent members of the Cumerio board to join NA's supervisory board. And on top, Cumerio's employees will be represented in a supervisory board, too. This all shows that the merger, the acquisition of Cumerio, is in the sense of both companies to make the best copper champion in Europe.
The first step, therefore, will be a consolidation of smelting cathode...
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