CARGOTEC IS PLANNING A SEPARATION OF KALMAR AND HIAB
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.
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. Cargotec’s intention would be to separate Kalmar as a new listed company by means of a partial demerger from Cargotec. 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.
|Date||Topic (click the headline to open)|
|16 August 2023||Changes in Cargotec leadership team and Pekka Ala-Pietilä proposed as the Chair of the Board of the potential separately listed standalone Kalmar|
|27 April 2023||Cargotec is planning a separation of Kalmar and Hiab|
|27 April 2023||Webcast about the 27 April 2023 announcement alongside the Q1/2023 results call|
|27 April 2023||27 April 2023 webcast presentation material|
|15 November 2022||Cargotec publishes new performance targets for its core businesses|
|14 November 2022||Cargotec has completed the strategic evaluation of MacGregor|
|30 March 2022||Cargotec strategy refocus|
Jaakko Eskola, Chair of the Board of Directors, Cargotec:
“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:
“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”
The planning of the potential partial demerger is intended to be carried out during 2023 and the potential execution and separate listing of Kalmar on Nasdaq Helsinki would, if carried out, 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.
Frequently asked questions (updated 26 September 2023)
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.
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.