Atlas Copco announced that it plans to split its company in two with is mining and civil engineering divisions spinning off to operate under the name NewCo.
In a statement, the company said NewCo will focus on mining/civil engineering customers and include the existing Mining and Rock Excavation Technique business area and the construction tools division with related service operations. This business has approximately 12,000 employees with annual sales of roughly 28 billion kronor ($3.1 billion).
Atlas Copco will focus on industrial customers and include the compressor technique, vacuum technique and industrial technique business areas plus the portable energy division, including service, and the specialty rental division. This business has approximately 33,000 employees and annual sales of about 74 billion kronor ($8 billion).
“The board and management believe that long-term shareholder value will be created by splitting the group into two separate companies,” said Hans Stråberg, Chair of the Board of Directors of Atlas Copco AB. “Both businesses are global leaders in their respective fields and will benefit from a more focused management responsibility.”
The Atlas Copco Group covers a diverse range of business segments and end-customers. Atlas Copco has over the years grown profitably and developed strong customer relations globally.
“The two businesses have different demand drivers and demand characteristics,” said Ronnie Leten, President and CEO of the Atlas Copco Group. “A split will increase their respective abilities to add value to customers, grow the business and attract talent.”
If the shareholders decide in favor of the proposal, the split of the group is planned to be done through a share distribution, whereby Atlas Copco AB’s shareholders will receive shares in NewCo AB in proportion to their existing shareholding. The intention is to list NewCo AB on the Nasdaq Stockholm stock exchange in Stockholm, Sweden, in the second quarter 2018.
The distribution of NewCo AB is foreseen to meet the requirements of Lex Asea, meaning that the Swedish-based shareholders of Atlas Copco AB are taxed only on the value of the shares received when they sell them.