* Shareholders approve share issue plan
* Share issue part of financing Inoxum acquisition plan
* Deal seen risky but necessary
(Adds quotes, share reaction)
By Terhi Kinnunen
HELSINKI, March 1 Finnish group
Outokumpu's shareholders approved a rights issue for
its 2.7 billion euro ($3.6 billion) acquisition of
ThyssenKrupp's stainless steel unit, a deal aimed at
boosting profitability and fending off Asian rivals.
The deal for Inoxum, expected to close by the end of 2012,
will make Outokumpu the world's No.1 stainless steel producer.
It is currently No.4 in Europe where rivals include Aperam
- spun off by ArcelorMittal last year - and
Some shareholders questioned the deal price at a meeting on
Thursday and asked whether two loss-making companies could turn
profitable, but accepted the plan, which analysts say will help
the company improve margins and cut overcapacity.
"In a business sense the deal is good. It was starting to
appear, more and more, that Outokumpu would not have done well
alone," said Swedbank analyst Erkki Vesola.
Outokumpu's bigger-than-expected fourth-quarter loss of 71
million euros underscored its need for change.
The acquisition will be partly funded by a 1 billion euro
rights issue of new Outokumpu stock, a move approved by
shareholders on Thursday. Outokumpu will also take on
liabilities of 422 million and issue a loan note of 235 million
Some investors questioned the deal, with one comparing
Outokumpu to another struggling Finnish company, Nokia
Nokia's joint venture with Germany's Siemens,
Nokia Siemens Networks, had been "a complete economic failure,"
the shareholder said.
Outokumpu, however, says it aims to achieve cost synergies
of between 225 million and 250 million euros by 2017 at the
Chief Executive Mika Seitovirta said the deal will also help
to it expand its presence outside Europe as the new firm will
also have production in the United States, Mexico and China.
"Outokumpu will become global, we have been suffering from
being so dependent from Europe," he said.
Finnish state investment agency Solidium as well as
shareholders KELA and Ilmarinen had already committed to
subscribe to 37 percent of the rights issue.
Seitovirta told Reuters the deal was proceeding according
schedule and the board would soon decide on details of the share
issue, which is expected to be carried out during the first half
of the year.
"All in all the whole deal is moving forward as planned," he
Shares in Outokumpu were 1.1 percent lower at 5.16 euros by
1455 GMT, about 37 percent below this year's high of 8.21 euros,
reached in January, a few days before the deal was announced.
($1 = 0.7450 euros)
(Editing by Helen Massy-Beresford and Mark Potter)