Valmet seeks merger with Neles, challenging Alfa Laval

STOCKHOLM (Reuters) - Finland's Valmet VALMT.HE has approached valves maker Neles NELES.HE with a merger proposal, challenging a $2 billion bid that Neles' board recommended from Swedish engineering group Alfa Laval ALFA.ST in July.

Valmet, Neles’ largest shareholder with a 29.5% stake, said on Tuesday it wanted to start talks with Neles over a deal that it said would create a strong platform for further business growth, “especially in automation systems and valves”.

Neles said in a statement that a letter it had received from Valmet “does not include a proposal for the specific terms of the merger, such as an exchange ratio”, adding its board would assess the letter and consider potential further actions.

Alfa Laval declined to comment.

Valmet, which has spoken out against Alfa Laval’s 11.50 euros per share bid, develops and supplies technologies, automation systems and services for the pulp, paper and energy industries. It has been raising its stake in Neles since July.

“Valmet and Neles share to a large extent a similar customer base, have a common heritage and are supported by the long-term megatrends,” Valmet CEO Pasi Laine said in a statement.

Neles, whose valves are used in industries ranging from oil and gas to pulp and paper, became an independent company in July when parent Metso’s 2019 deal to merge its bigger minerals technology unit with Outotec was finalised.

Valmet said a potential merger with Neles would require negotiations between the two companies.

“Even if such negotiations are initiated, there is no certainty that they will result in a final agreement,” it said.

Reporting by Johannes Hellstrom and Helena Soderpalm; editing by Jason Neely and Mark Potter