Metso acquires paper machine manufacturer in China

Feb 13, 2006, Metso Paper has made an agreement to buy the entire share capital of Shanghai-Chenming Paper Machinery Co. Ltd, a Chinese manufacturer of paper machines. The company is currently owned by Shandong Chenming and Shanghai Heavy Machinery, and it is located in the Shanghai area in Jiading. The finalization of the transaction is subject to approval by the Chinese authorities. The transaction value will be published after the finalization.

The Shanghai-Chenming Paper Machinery’s foundry and machine shop manufacture primarily narrow paper and board machines for the Chinese market as well as dry-end components. The company employs 630 people, and its net sales in 2004 amounted to about EUR 13 million.

“When finalized, the acquisition will enable us to better serve not only our Chinese customers but also the pulp and paper industry in Asia. The Shanghai area is also excellent in terms of developing the purchasing function,” notes Risto Hautamäki, President, Metso Paper.

China’s paper industry is growing strongly. Since the year 2000, about half the orders for new, big paper manufacturing lines have come from China. Metso Paper is a leading supplier of paper machinery in China, and its strategic objective is to strengthen its presence in customer service, servicing, manufacturing, and sourcing.

The company’s current main owner, Shandong Chenming, is one of the biggest paper manufacturers in China and a Metso Paper customer. Metso Paper has delivered several paper machines to Shandong Chenming’s mills in Shouguang and Wuhan. The most recent order was for the world’s biggest deinking and paper manufacturing lines, which will start up at the end of 2006.

Metso is a global engineering and technology corporation with 2005 net sales of approximately EUR 4.2 billion. Its 22,000 employees in more than 50 countries serve customers in the pulp and paper industry, rock and minerals processing, the energy industry and selected other industries.

It should be noted that certain statements herein which are not historical facts, including, without limitation, those regarding expectations for general economic development and the market situation, expectations for customer industry profitability and investment willingness, expectations for company growth, development and profitability and the realization of synergy benefits and cost savings, and statements preceded by ”expects”, ”estimates”, ”forecasts” or similar expressions, are forward-looking statements. These statements are based on current decisions and plans and currently known factors. They involve risks and uncertainties which may cause the actual results to materially differ from the results currently expected by the company.

Such factors include, but are not limited to:
(1) general economic conditions, including fluctuations in exchange rates and interest levels which influence the operating environment and profitability of customers and thereby the orders received by the company and their margins
(2) the competitive situation, especially significant technological solutions developed by competitors
(3) the company’s own operating conditions, such as the success of production, product development and project management and their continuous development and improvement
(4) the success of pending and future acquisitions and restructuring.

Contact Information

Risto Hautamäki

President, Metso Paper

Metso Corporation

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