Umicore & Nyrstar
Content
Executive summary
Strategy & motives
Deal structure
Advice
Stock price reaction
Executive summary
In August 2007, two companies, Umicore and Zinifex signed a Business Combination and Shareholders’ of their zinc and lead smelting and alloying businesses, thereby creating a new company Nyrstar. Umicore and Zinifex respectively obtained a 40% and 60% share in the new created company. The percentages are related to the relative value of assets brought in by each of the two companies.
The next step in the creation of Nyrstar as we know it today, was an IPO of the joint-venture which was processed at the end of 2007 and which could have lead to a total exit of both initial shareholders, but eventually didn’t. The whole deal structure is stated in the first part of this paper.
The deal was a logical consequence of the strategic plan Umicore had set out for itself. Earlier it had already divested Cumerio in 2005 because the company was shifting its activities from mining and smelting to innovative materials with a main focus on R&D. Focusing on core activities, both for Umicore and Nyrstar, was the main reason for this spin-off. Literature also proves that improvement of efficiency and productivity, cash for restructuring operations and bypassing the conglomerate discount are arguments in favor of this specific deal. We incorporated this in the advice section.
An enquiry on stock market prices showed that there was little to no significant stock price behavior at the announcement date, nor in the time period of two days prior and after the announcement. The exact method and calculations can be found in the last section of this research paper.
Strategy and motives
The spin-offs
In October 2007, the Chief Executive Officer of Umicore, Thomas Leysen, clarified Umicore’s motives to spin-off its zinc smelting business and alloying assets to Nyrstar. He
Executive summary
Strategy & motives
Deal structure
Advice
Stock price reaction
Executive summary
In August 2007, two companies, Umicore and Zinifex signed a Business Combination and Shareholders’ of their zinc and lead smelting and alloying businesses, thereby creating a new company Nyrstar. Umicore and Zinifex respectively obtained a 40% and 60% share in the new created company. The percentages are related to the relative value of assets brought in by each of the two companies.
The next step in the creation of Nyrstar as we know it today, was an IPO of the joint-venture which was processed at the end of 2007 and which could have lead to a total exit of both initial shareholders, but eventually didn’t. The whole deal structure is stated in the first part of this paper.
The deal was a logical consequence of the strategic plan Umicore had set out for itself. Earlier it had already divested Cumerio in 2005 because the company was shifting its activities from mining and smelting to innovative materials with a main focus on R&D. Focusing on core activities, both for Umicore and Nyrstar, was the main reason for this spin-off. Literature also proves that improvement of efficiency and productivity, cash for restructuring operations and bypassing the conglomerate discount are arguments in favor of this specific deal. We incorporated this in the advice section.
An enquiry on stock market prices showed that there was little to no significant stock price behavior at the announcement date, nor in the time period of two days prior and after the announcement. The exact method and calculations can be found in the last section of this research paper.
Strategy and motives
The spin-offs
In October 2007, the Chief Executive Officer of Umicore, Thomas Leysen, clarified Umicore’s motives to spin-off its zinc smelting business and alloying assets to Nyrstar. He