CARGOTEC IS PLANNING A SEPARATION OF KALMAR AND HIAB

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.

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

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.

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.

During 2023, management will carry out the planning of the potential demerger, which will then have to be approved by the Board of Directors during 2023–2024.

Assuming the demerger plan is approved, the execution and separate listing of Kalmar is aimed to take place in 2024.

We will provide a more detailed timeline subject to and upon the Board’s approval of the demerger plan.

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.

We are currently exploring all alternatives and will provide more information at a later stage. Our decision will be based on a holistic evaluation of stakeholders’ interests that will ensure a smooth and lean operation of the two businesses while maximising shareholder value.

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.

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.

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.

Upon a final decision of the Board of Directors and assuming the transaction goes ahead, Cargotec will provide a clear indication of the expected costs related to the transaction in a timely manner.

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.

Based on the company’s analysis, the prerequisites of a tax neutral transaction under the Finnish tax law should be met, as a business unit – essentially consisting of dedicated subsidiary shares, related debt 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. Additionally, a confirmatory tax ruling would be obtained from the Finnish tax authorities prior to implementation of the partial demerger to ascertain tax neutrality of the partial demerger under the Finnish tax law.

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). Kalmar shares received as demerger consideration would be newly issued shares. The planned partial demerger would be carried out as a tax neutral transaction under Finnish tax law provision implementing the EU Merger Directive, in which case no direct tax costs should be triggered for Cargotec shareholders receiving Kalmar shares as demerger consideration. A confirmatory tax ruling would be obtained from the Finnish tax authorities prior to implementation of the partial demerger to ascertain the tax neutrality of the partial demerger under Finnish tax law.

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.