Stock Exchange release November 12, 1999 10:00:00 AM CET
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METSO STRENGTHENS ITS GEARS OPERATIONS

Metso Corporation has agreed to acquire a major part of Santasalo-JOT Corporation's industrial gear operations. Metso is scheduled to take over this operation on December 30, 1999. The value of the business operation to be acquired is approximately EUR 47 million (FIM 280 million). The acquisition price is approximately EUR 40 million, which includes goodwill value of approximately EUR 6 million.

The acquired business operation will increase the annual net sales of Metso's gears business to almost EUR 120 million (FIM 700 million). Metso's gears business operations will form one of the world's largest manufacturers in this sector. The new products added by this acquisition will enable the company to supply uniform drive systems for fiber and paper making lines, for example.

"This new business brings us strong know-how in the field," states Tapani Vainio-Mattila, head of Metso's Gears and Components business group. "We are seeking growth based on internal deliveries to Metso's strategic core business areas – that is, paper and fiber technology and rock crushing – as well as new businesses such as the use of wind power. Metso also offers us synergic benefits in automation."

The agreement made with Santasalo Oy, part of the Santasalo-JOT Corporation, covers the company's R&D, manufacturing, sales and service operations in Finland, Sweden, Germany and North America, and the rights to the company's name Santasalo. About 405 employees will be transferred to Metso Corporation along with the new operations. The transaction will also mean the transfer of Metso's gear manufacturing operation in Parkano, with annual sales of FIM 40 million and 68 employees, to the Gears and Components Group, which will take the name Santasalo.

In connection with the acquisition an agreement was also made on global sales and distribution of gears with SEW-Eurodrive, which owns one-third of Santasalo Oy. This agreement will give Metso a major new distribution channel for its gears business.

SEW-Eurodrive is a global supplier of drive motors, speed reducers and electronic controls. In 1998, its net sales totaled EUR 800 million (FIM 4.8 billion) and it had 6,800 employees. SEW-Eurodrive has manufacturing units in five countries and a global assembly and distribution network.

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