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CARGOTEC IS PLANNING A SEPARATION OF KALMAR AND HIAB

On 27 April 2023, the Board of Directors of Cargotec decided to investigate and initiate a process to separate Cargotec's core businesses Kalmar and Hiab into two standalone companies. On 1 February 2024, The Board approved a demerger plan concerning the separation of Kalmar into a new listed company. On 22 May 2024, Cargotec announced that the Finnish Financial Supervisory Authority has approved the prospectus concerning the partial demerger of Cargotec and listing of Kalmar.

The Board of Directors of Cargotec has decided to investigate and initiate a process to potentially separate its core businesses Kalmar and Hiab into two standalone companies. Based on the initial assessment, the Board of Directors of Cargotec has estimated that the separation of Kalmar and Hiab could unlock shareholder value by allowing both businesses to pursue sustainable profitable growth opportunities independently.

On 1 February 2024, Cargotec's Board of Directors approved a demerger plan concerning the separation of the Kalmar business area into an independent listed company. The planned completion date of the demerger is 30 June 2024. The demerger is subject to approval by the Annual General Meeting of Cargotec to be held on 30 May 2024. Certain major shareholders of Cargotec, holding in the aggregate approximately 41 percent of the shares and approximately 75 percent of the votes in Cargotec, have indicated their support for the proposed Demerger.

Demerger and Listing Prospectus

The Finnish Financial Supervisory Authority has on 22 May 2024 approved the prospectus concerning the partial demerger of Cargotec and listing of Kalmar. Access to the material is restricted for regulatory reasons. In order to obtain access to the material, you are requested to provide a confirmation regarding the details on the following page.

Jaakko Eskola, Chair of the Board of Directors, Cargotec, on the Board approval of the demerger plan concerning the separation of Kalmar into a new listed company (1 February 2024):

“The planning and evaluation of the demerger has progressed well. The Board of Directors with the support of certain major shareholders, has after careful consideration decided to propose the separation of Kalmar from Cargotec by means of partial demerger to increase shareholder value”


Jaakko Eskola on the separation of Kalmar and Hiab (27 April 2023):

“The separation of Kalmar and Hiab would be the logical next step in the growth journey. The Board is convinced that the separation would unlock shareholder value by allowing both businesses to pursue sustainable profitable growth opportunities independently”

Casimir Lindholm, President & CEO, Cargotec (27 April 2023):

“Kalmar and Hiab serve different customers and have limited cross selling synergies. Both businesses have ambitious growth plans and we are now assessing if those would be better served as separate standalone businesses. Kalmar has recently gone through a major transformation to become a more focused business and has an excellent foundation in place to continue to grow independently. Hiab has a proven track record of profitable growth and M&A”

Cargotec’s intention would be to separate Kalmar as a new listed company by means of a partial demerger from Cargotec. If carried out, the potential execution and separate listing of Kalmar on Nasdaq Helsinki, Finland, would take place in 2024. As announced by Cargotec on 14 November 2022, MacGregor, which is currently one of the three business areas of Cargotec, will not be part of Cargotec’s portfolio in the future. Therefore, in parallel, Cargotec’s focus remains to continue looking for a solution for MacGregor during 2024. If the planned actions are completed, there would be three separate businesses, Kalmar, Hiab and MacGregor.

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The planned partial demerger would be a logical next step in Cargotec’s previously announced aim to increase the independence of its businesses. The aim of the planned transaction is to create two focused world-leading listed companies.

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Frequently asked questions

Why are you planning to separate the businesses?

Kalmar and Hiab standalone would enhance their business performance through higher agility, decisiveness and stronger management focus.

As two separate businesses, the companies could achieve faster organic and inorganic growth thanks to a more tailored capital allocation strategy and flexible access to external capital.

The Board of Directors is convinced that the separation would unlock shareholder value by allowing both businesses to pursue sustainable profitable growth opportunities independently.

Are there any dis-synergies from separation and demerger for Kalmar and Hiab?

Businesses today do not share sizable operational synergies between them and are operating independently already.

Did you consider other strategic alternatives, such as a sale of Kalmar?

The Board of Directors has considered all feasible alternatives that would serve the best interests of the company’s shareholders.

The current plan would allow Kalmar and Hiab unlock the highest value to the shareholders by enabling the full potential of the businesses.

What will the relationship with Cargotec and Kalmar look like in the future?

After the first phase of the planned actions, Kalmar would be operating standalone as a listed company. No ownership in Kalmar by Cargotec is expected following the transaction.

What would be the estimated timetable for these planned changes?

The planning of the potential partial demerger took place during 2023.

On 1 February 2024,  Cargotec’s Board of Directors approved a demerger plan concerning the separation of Kalmar into an independent listed company. The demerger is subject to approval by the AGM of Cargotec to be held on 30 May 2024. The planned completion date of the demerger is 30 June 2024. The trading in the class B shares of Kalmar on Nasdaq Helsinki is expected to commence on or about 1 July 2024.

The demerger and listing prospectus, which is expected to be published by Cargotec in May 2024 before the AGM, will contain more detailed information on the demerger and Kalmar. 

 

Why are you planning to separate the businesses now?

Having explored a number of strategic alternatives, we believe that it would be the right time to execute this separation.

With diverging market dynamics and capital allocation needs, Kalmar and Hiab, as standalone businesses, would be better positioned to cater to their customers’ needs, lead on their industries’ latest trends (including ESG) and maximise shareholder value.

However, we will continue to closely monitor the prevailing market conditions to determine whether the Kalmar separation, considering especially its listing as a separate company, will be in the best interest of our shareholders.

Have you made any significant leader appointments following the announcement?

On 9 November 2023, Cargotec announced that Sami Niiranen had been appointed as President of Kalmar and proposed as the new CEO of the potential separately listed standalone Kalmar. He started as President of Kalmar on 1 April 2024 and joined Cargotec’s leadership team.

On 1 February 2024, Cargotec announced the Kalmar management team as of 1 April 2024. The members of the Kalmar management team are also presented in this pdf image.

Can the future Board members be members of both Kalmar and Hiab Boards?

The majority of the Board needs to be separate and independent, but certain overlaps may be helpful to ensure the continuity of the businesses in order to preserve corporate culture and sustain business performance.

What is the Demerger Committee and who are the members?

The Demerger Committee was established ​by the Board i​n August 2023 to support the potential standalone Kalmar listing readiness preparations. The ​committee will oversee the preparations for listing readiness and corporate governance matters for the potential standalone Kalmar. The committee consists of three Board members​, Jaakko Eskola​ as the Chair of the committee and Teresa Kemppi-Vasama and Tapio Kolunsarka ​a​s members. Committee members are independent of the Company.

Will the new companies still have two share classes?

The shareholders of the Demerging Company shall receive as demerger consideration one (1) new share of the corresponding share class (i.e., class A or class B) of Kalmar for each class A and class B share owned in Cargotec (the “Demerger Consideration”), that is, the Demerger Consideration 4 (17) shall be issued to the shareholders of Cargotec in proportion to their existing shareholding with a ratio of 1:1. There shall be the corresponding two (2) share classes in Kalmar as in Cargotec, i.e.,  class A and class B, and the shares of Kalmar shall not have a nominal value. (See the Demerger plan document, chapter 4.1)

What happens to shareholdings in current Cargotec?

If the planned partial demerger were carried out, Cargotec would continue as a listed entity on Nasdaq Helsinki. The planned demerger would not have an impact on the number of the shares held in Cargotec by the shareholders or respective ownership levels.

In the planned partial demerger, the current shareholders of Cargotec would receive shares in the new company (Kalmar) pro rata to their existing shareholdings in Cargotec (the exact ratio to be decided at a later stage). Consideration shares could consist of one or several share classes. From the perspective of Cargotec shareholders, the demerger would effectively be an asset divestment from Cargotec, from which Cargotec shareholders would correspondingly receive listed shares in Kalmar as demerger consideration. Thus, the demerger would not have an effect on the ownership levels in Cargotec by the shareholders.

Is there a decision made on the domiciles of the new companies or where the shares will be traded?

Both Cargotec and Kalmar are Finland-based companies, and if the planned partial demerger were carried out, it has been planned that the shares of the new company (Kalmar) would be listed on the official list of Nasdaq Helsinki. Cargotec would also continue as a listed entity on Nasdaq Helsinki. Possible changes to the domiciles of the companies, if any, will be assessed and made at a later stage.

What is the status of the plan for MacGregor?

Looking for a solution for MacGregor during 2024 is a key priority for management. We are currently focused on improving MacGregor’s financial performance and will be ready to re-initiate the process when market conditions improve and the outlook becomes more certain.

Cargotec's President and CEO Casimir Lindholm at the Financial Statements review 2023: "Amid all the other actions, MacGregor is undergoing a successful turnaround according to the plan. Demand for its merchant and service solutions in the fourth quarter continued at a healthy level, resulting in a 7 percent increase in MacGregor’s order book compared to the end of 2022. Sales growth in merchant and services businesses, combined with reduced losses in the offshore business, resulted in the highest quarterly comparable operating profit, EUR 13 million, in nine years. However, there are still challenges related to a few offshore projects we have committed to in the past. Without the loss-making offshore business, MacGregor’s comparable operating profit margin would have been around 10 percent. "

Will there be tax consequences?

The planned partial demerger would be carried out as a tax neutral transaction under the Finnish tax law provision implementing the EU Merger Directive. A favourable tax treatment for the shareholders of Cargotec is a prerequisite for the partial demerger and it would not be carried out if there would remain issues in this regard.

Cargotec has obtained a confirmatory tax ruling from the Finnish tax authorities to ascertain tax neutrality of the partial demerger under the Finnish tax law. Based on the tax ruling, the prerequisites of a tax neutral transaction under the Finnish tax law will be met in the planned partial demerger, as a business unit – essentially consisting of dedicated subsidiary shares, related assets and debts, and certain group functions – is to be transferred from the partially demerging company to the newly established recipient company that gives pro-rata consideration as newly issued shares.

How will Kalmar shares be treated for tax purposes?

In the planned partial demerger, the current shareholders of Cargotec would receive shares in the new company (Kalmar) pro rata to their existing shareholdings in Cargotec with a ratio of 1:1, so that the current shareholders of Cargotec receive as demerger consideration one (1) new share of the corresponding share class (i.e., class A or class B) of Kalmar for each class A and class B share owned in Cargotec. The planned partial demerger would be carried out as a tax neutral transaction under Finnish tax law provision implementing the EU Merger Directive. A confirmatory tax ruling has been obtained from the Finnish tax authorities to ascertain the tax neutrality of the partial demerger under Finnish tax law. Based on the tax ruling, no direct tax costs should be triggered for Cargotec shareholders receiving Kalmar shares as demerger consideration.

For the shareholders’ capital gains tax purposes in future disposals, Kalmar shares would have the original acquisition cost of Cargotec shares divided to Cargotec and Kalmar in proportion to their net assets or, if the allocation would be materially different based on fair values, then based on fair values of Cargotec and Kalmar. Simply put, this means that the acquisition cost of Kalmar shares would not be stepped up to be the fair value in the partial demerger.

Who have you appointed as financial advisors for the proposed demerger?

Goldman Sachs International, Danske Bank A/S, Finland Branch and BNP PARIBAS have been retained as financial advisors to Cargotec. The financial advisors are acting for Cargotec and no one else in connection with the planned partial demerger and will not be responsible to anyone other than Cargotec for providing the protections afforded to clients of the financial advisors, or for giving advice in connection with the planned partial demerger or any other matter.

More details on the assessment and the potential transaction will be provided in due course once the process proceeds. The timeline of the potential transactions is subject to change. These planned actions are subject to normal local legal requirements and works council consultations. In the event that the Board opts to recommend the partial demerger option as a means to separate Kalmar from the Cargotec group, the proposal would be subject to approval from a General Meeting of Cargotec.

* The following applies to this presentation, the oral presentation of the information in this presentation by Cargotec Corporation (the “Company” or “Cargotec”) or any person on behalf of the Company, and any question-and-answer session that follows the oral presentation (collectively, the “Information”). In accessing the Information, you agree to be bound by the following terms and conditions. This presentation does not constitute an offer of or an invitation by or on behalf of Cargotec, or any other person, to purchase any securities. The Information includes “forward-looking statements” that are based on present plans, estimates, projections and expectations and are not guarantees of future performance. They are based on certain expectations and assumptions, which, even though they seem to be reasonable at present, may turn out to be incorrect. Shareholders should not rely on these forward-looking statements. Numerous factors may cause the actual results of operations or financial condition of Cargotec, Kalmar or Hiab to differ materially from those expressed or implied in the forward-looking statements. Information in this presentation, including but not limited to forward-looking statements, applies only as of the date of this presentation and is not intended to give any assurances as to future results. The Information includes estimates relating to the benefits expected to arise from the planned partial demerger, which are based on a number of assumptions and judgments. The assumptions relating to the estimated benefits arising from the planned partial demerger are inherently uncertain and are subject to a wide variety of significant business, economic, regulatory and competitive risks and uncertainties that could cause the actual benefits arising from the planned partial demerger to differ materially from the estimates in this presentation. Further, there can be no certainty that the planned partial demerger will be completed in the manner and timeframe described in this presentation, or at all. All the discussion topics presented during the session and in the attached material are still in the planning phase. The final impact on the personnel, for example on the duties of the existing employees, will be specified only after the legal requirements of each affected function / country have been fulfilled in full, including possible informing and/or negotiation obligations in each function / country.

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