Following a strategic study, Metso’s board has announced a demerger plan that will see the company’s pulp, paper and power divisions separated from its automation and mining & construction divisions. The Mining, construction and automation company will retain the Metso name, while the pulp, paper and power business will be named Valmet Corporation.

Under the demerger plan Valmet would be listed on the NASDAQ OMX Helsinki stock exchange under the same ownership structure as Metso has currently. The two companies would be independent, with no cross-ownership between Metso and Valmet.

Commenting on the decision Metso chairman Jukka Viinanen said, “After carefully reviewing various alternatives that would accelerate the implementation of Metso’s strategy and its growth, the Board has concluded that spinning off Metso’s pulp, paper and power businesses through a demerger offers the best potential to increase the focus and ambition of Valmet and Metso and the implementation of their respective distinct growth strategies.”

Metso president and CEO Matti Kähkönen added, “Both Valmet and Metso would be sizeable, globally leading businesses with strong balance sheets. Strengthening their respective cultures, goals and agility to execute their strategy through a demerger would enable them to realize their full potential in the future.”

Metso said that financing arrangements for Valmet are in place and that the demerger plan has received consent from most of the company’s lenders. The next step will be to secure consent from Metso’s bond holders ahead of an extraordinary general meeting to approve the plan on or about October 1. It is envisaged that the demerger will take place at the end of the calendar year.

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