WSOY, Sanoma Osakeyhtiö, Helsinki Media as well as Devarda, which is a shareholder in the two first-mentioned companies, will merge to form a new company, Sanoma - WSOY Oyj. The new company will be Scandinavia?s second largest media corporation, and Rautakirja will be its subsidiary. The merger will enter into force on 1 May 1999. A press conference about the matter will be held on 15 May 1998 starting at 14.00 hours in Hotel Intercontinental, Mannerheimintie 46, Helsinki.
COMBINATION MERGER
The Boards of Werner Söderström Osakeyhtiö - WSOY, Sanoma Osakeyhtiö, Helsinki Media Company Oy and holding company Oy Devarda Ab, which owns a stake in the two latter, approved the plan for the merger of the companies on 15 May 1998. The plan will be presented to the companies? extraordinary general meetings for approval on 29 June 1998. It will be carried out as a combination merger where the parties merge to form a new company, Sanoma - WSOY Oyj. According to the preliminary schedule of the plan, the merger permit will be registered and the merger will enter into force on 1 May 1999.
STOCK EXCHANGE LISTING
A listing for Sanoma - WSOY Oyj?s share series A and B will be sought on the Helsinki Stock Exchange. According to the schedule of the merger plan, trading in the shares will start on 3 May 1999. WSOY?s shares will be traded as before until the date of the merger.
RELATIVE VALUES OF THE SHARES
In the merger, Werner Söderström Osakeyhtiö WSOY?s market capitalisation is evaluated at FIM 3,675 million, taking into account that WSOY distributes a total extra dividend of FIM 58 million for 1998. Sanoma Osakeyhtiö?s market capitalisation is estimated at FIM 6,527 million including cross holdings; Helsinki Media Company?s at FIM 1,676 million; and Oy Devarda Ab, which holds shares both in Sanoma and Helsinki Media, is estimated at FIM 2,405 million including cross holdings.
MERGER CONSIDERATION
Sanoma - WSOY Oyj shares will be issued by way of the merger consideration as follows:
Werner Söderström Osakeyhtiö - WSOY?s shareholders:
Each Werner Söderström Osakeyhtiö - WSOY share of series A will be exchanged for one (1) Sanoma - WSOY Oyj share of series A, and each Werner Söderström Osakeyhtiö ? WSOY share of series B will be exchanged for one (1) Sanoma - WSOY Oyj share of series B.
Sanoma Osakeyhtiö?s shareholders:
Each Sanoma Osakeyhtiö share of series K will be exchanged for 17.6074 Sanoma - WSOY Oyj shares of series A and 32.9373 shares of series B. Each Sanoma Osakeyhtiö share of series E will be exchanged for 50.5447 Sanoma - WSOY Oyj shares of series B.
Helsinki Media Company Oy?s shareholders:
Each Helsinki Media Company Oy share of series K will be exchanged for 2.5266 Sanoma - WSOY Oyj shares of series A and 4.5480 shares of series B. Each Helsinki Media Company Oy share of series E will be exchanged for 7.0747 shares of Sanoma - WSOY Oyj share of series B.
Oy Devarda Ab?s shareholders:
Each Oy Devarda Ab share of series A will be exchanged for 198.5166 Sanoma ? WSOY Oyj shares of series A, and each Oy Devarda Ab share of series B will be exchanged for 1,004.6143 Sanoma - WSOY Oyj shares of series B.
Sanoma - WSOY Oyj shares of series A and B differ so that a share of series A carries 20 votes and a share of series B carries one vote at a general meeting. The Articles of Association contain a provision that a share of series A can be converted to a share of series B.
No consideration will be given for the shares held by a merging company in any of the other merging companies.
SHAREHOLDERS? AGREEMENT The principal shareholders of the merging companies have entered into a shareholders? agreement on 14 May 1998. The contracting parties together with Sanoma Osakeyhtiö represent approximately 40 % of WSOY?s shares and approximately 60 % of its votes, and approximately 80 % of the shares and votes in Sanoma Osakeyhtiö and Helsinki Media. After the merger the parties to the shareholders? agreement will hold in total approximately 70 % of the votes in Sanoma ? WSOY. The common objective of the contracting parties is to strengthen the Finnish language publishing industry which has a Finnish ownership base.
According to its Articles of Association, the objective of Sanoma ? WSOY Oyj?s publishing operations is to publish good literature promoting national culture. The stated objective of the company?s magazine publishing activity is to advance democracy, social justice, freedom of expression, development, spiritual and economic wellbeing.
Sanoma Osakeyhtiö?s principal shareholders who have signed the shareholders? agreement have announced measures to reduce their aggregate votes in Sanoma - WSOY to less than 50 %. Sanoma - WSOY?s biggest single shareholder will be Aatos Erkko who will hold either directly or through Oy Asipex Ab 29.19 % of the shares and 28.28 % of the votes. The second biggest shareholder is Patricia Seppälä who will hold 11.44 % of the shares and 11.51 % of the votes.
The largest shareholder of Werner Söderström Osakeyhtiö - WSOY?s traditional shareholders is Alfred Kordelinin yleinen edistys- ja sivistysrahasto which holds 3.57 % of the shares and 6.54 % of the votes. In connection with the merger, Suomen Kulttuurirahasto and holding company Lastannet Holding B.V., which holds shares in Helsinki Media Company Oy, have also agreed on a transaction under which Lastannet will sell shares corresponding to 5.22 % of the shares in the new company to Suomen Kulttuurirahasto, whose holding after the share deal will be 1.70 % of the shares and 6.25 per cent of the votes in the new Sanoma - WSOY.
According to the shareholders? agreement, the objective of the company is to pursue an active dividend policy which means that at least one third of the profits will be distributed as dividend. Another objective is to pay an extra dividend in 2000, 2001 and 2002, corresponding to FIM 15/share, i.e. FIM 5/share/year on average.
SANOMA - WSOY OYJ
The operations of the merging companies are mutually complementing and constitute an excellent operative whole. The merger will result in the formation of a domestic media group operating in all sectors of modern communications.
Werner Söderström Osakeyhtiö - WSOY and Sanoma Osakeyhtiö have played a central role in Finnish culture and history. The centennial traditions of the companies are a binding legacy. This structural arrangement will ensure that the best elements of these traditions can be nurtured and developed in the right way.
The arrangement will provide a solid basis for developing both book, newspaper and magazine publishing in a way beneficial to writers, editors, producers and customers. The new corporate form will permit a sensible development of production machinery and through different marketing media provide both the know-how and the good conditions, necessary for efficient marketing operations. It will also guarantee sufficient resources for participation in the internationalisation process.
Sanoma - WSOY?s operating areas offer interesting potential for development and growth. Based on its good personnel resources and its strong capital structure, the corporation will also have adequate resources to utilise new opportunities.
Sanoma - WSOY possesses a lot of material know-how also from the multi-media environment. Supported by the constellation resulting from the merger, the company?s products will have good physical and electronic distribution channels. TV channel Nelonen and the utilisation of cable TV network as an electronic distribution channel will offer interesting growth possibilities in Finland. Other growth areas include publishing of economic information both in hard form and electronic media, as well as development of multimedia products.
STRUCTURE AND ADMINISTRATION OF THE NEW COMPANY
The 1977 net sales of the new company totalled FIM 7.4 billion, in other words, it will be the second largest media group in the Nordic countries. The equity ratio of the new company is 61 %.
According to the shareholders? agreement, the objective is to incorporate the key operations of Werner Söderström Osakeyhtiö - WSOY which engages in book publishing business, newspaper publisher Sanoma Osakeyhtiö, and Helsinki Media Company Oy whose operations include magazine publishing, and various forms of electronic communications, before the merger enters into force, to retain the autonomy of the companies also in the new corporation.
The largest subsidiary of the new company is Rautakirja Oyj where the new company will hold an interest of 55 %. Rautakirja Oyj?s business operations include neighbourhood store chains, distribution of media products, film distribution, and catering services for travellers.
BOARD OF DIRECTORS; AUDITORS
The merger plan proposes that Mr. Aatos Erkko be elected Chairman and Mr. Esko Koivusalo Vice Chairman of the Board of Directors of Sanoma - WSOY Oyj. It also proposes that Ms. Jane Erkko, Ms. Marjukka af Heurlin, Mr. Paavo Hohti, Mr. L.J. Jouhki, Mr. Kyösti Järvinen, Mr. Robin Langenskiöld, Ms. Rafaela Noyer, Mr. Jaakko Rauramo and Mr. Antero Siljola be appointed Board members.
A proposal to the general meeting will be made to appoint as auditors Mr. Tauno Haataja, APA with SVH Coopers & Lybrand, Corporation of Auditors, as his deputy auditor, and Mr. Pekka Nikula, APA, with Ms. Johanna Perälä, APA as his deputy auditor.
MANAGEMENT
It is proposed that Sanoma Osakeyhtiö?s President and CEO Mr. Jaakko Rauramo be appointed President of the new company and WSOY?s President and CEO Mr. Antero Siljola as his Deputy.
The Board of Management of the new company will include Mr. Aarno Heinonen, responsible for economy and finance; Mr. Nils Ittonen, investments; and Ms. Kerstin Rinne, legal affairs and corporate planning.
Mr. Antero Siljola will continue as WSOY?s Group President and CEO, with Group Executive Vice President and Senior Vice President, General Literature, Mr. Jorma Kaimio as his Deputy. Publisher, Executive Vice President Mr. Seppo Kievari will be appointed President of the new Sanoma Osakeyhtiö, with Executive Vice President Mr. Martti Ojares as his Deputy. Mr. Tapio Kallioja will continue as President of Helsinki Media Company Oy, with Executive Vice President Ms. Eila Ailasmaa as his Deputy.
Rautakirja?s President is Mr. Hannu Syrjänen.
IMMEDIATE MEASURES
The parties to the merger intend to start co-ordinating their operations without delay.
Before the implementation of the merger, WSOY and Kustannusosakeyhtiö Otava will negotiate about the ownership of Yhtyneet Kuvalehdet Oy, Acta Print Oy and Suuri Suomalainen Kirjakerho Oy.
As regards the operating license of TV channel Nelonen the measures undertaken will comply with the terms of the currently valid license and the Television and Radio Broadcasting Act.
INFORMATION ON THE MERGING COMPANIES
Werner Söderström Osakeyhtiö - WSOY, established in 1878, is a diversified communications group that publishes and produces media products for the education, entertainment and benefit of people. The Group?s business consists of publishing, production and investment activities. WSOY Group?s net sales for 1997 totalled FIM 1,128 million and its equity ratio was 69 %.
Sanoma Osakeyhtiö started operation in 1889. It is a publishing company whose principal products are Finland?s leading daily Helsingin Sanomat and Finland?s biggest afternoon paper Ilta-Sanomat and engages in printing operations. Of its subsidiaries, Leijonajakelu Oy is engaged in distribution of newspapers and other printed products, Startel publishes a recently launched financial paper Taloussanomat and offers electronic financial information services, Lehtikuva Oy is an international picture agency, and Sanoma Finance AG pursues international investment operations. The Group?s net sales for 1997 totalled FIM 1,949 million and its equity ratio was 76 %.
Helsinki Media Company Oy, which became operative in 1994, is a diversified media company operating in the fields of printed and electronic communications. Its operations include publishing of magazines and special papers, comics and books, printing operations, network communications and TV operations. The Group?s net sales for 1997 totalled FIM 1,102 million and its equity ratio was 71 %.olding company Oy Devarda Ab is a shareholder in Sanoma and Helsinki Media. Its merger with the other companies is necessary to decentralise the share ownership of the new company.
Helsinki, 15 May 1998
WERNER SÖDERSTRÖM OSAKEYHTIÖ ? WSOY
Board of Directors
SANOMA OSAKEYHTIÖ
Board of Directors
HELSINKI MEDIA COMPANY OY
Board of Directors
OY DEVARDA AB
Board of Directors
ENCLOSURES 1. Merger plan 2. Proposal for Sanoma ? WSOY Oyj?s Articles of Association 3. Shareholders? agreement
For more information: Mr. Jaakko Rauramo, President and CEO, Sanoma Osakeyhtiö; tel. +358 9 122 4630 Mr. Antero Siljola, President and CEO, WSOY; tel. +358 9 6168 200 Mr. Tapio Kallioja, Helsinki Media Company Oy; tel. + 358 9 120 4200
Distribution: Helsinki Stock Exchange Principal media
Mr. Esko Koivusalo: "Suomalaisen Kirjallisuuden Seura, Kalevalaseura, Alfred Kordelinin yleinen edistys- ja sivistysrahasto ja Alfred Kordelinin Seura, Suomen Kulttuurirahasto as well as WSOY:n kirjallisuussäätiö constitute a cultural alliance among the shareholders of WSOY, based on an agreement, whose objective is to ensure the continued existence of traditional Finnish language book publishing. The merger will provide an even stronger basis for the future of publishing business. The alliance of the above cultural organisations considers it important that the new media company which has significant social dimensions will remain in Finnish ownership."
Aatos Erkko and Patricia Seppälä: "The objective of the present arrangement is to guarantee the continued development of operations in the 21st century. The merger will create the possibility to take on the challenges posed by the domestic and international markets in an era of radically evolving technologies. It will also safeguard the continuation of the best traditions in the publishing operations of Werner Söderström Osakeyhtiö ? WSOY, Sanoma Osakeyhtiö and Helsinki Media Company and the strong position of Finnish language and culture. As shareholders we are convinced that Sanoma ? WSOY Oyj will be a solid and modern corporation with good future prospects."
Mr. Jaakko Rauramo: "Sanoma ? WSOY will be a company that offers a highly interesting and challenging working place in the future. The spiritual and financial resources of the new company will be an excellent starting point for growth and development, and the merger will create possibilities for high-quality publishing, internationalisation, exploitation of modern technologies and profitable operations." Mr. Antero Siljola: "The establishment of the new company will accelerate WSOY?s growth plans and provided new exciting possibilities also in the electronic media field. For its writers and producers WSOY will be a publishing house more firmly committed to book publishing and able to offer new opportunities.
Mr. Tapio Kallioja: "Helsinki Media will contribute the operations of a dynamically developing versatile media house to the new media constellation. We have dedicated resources to the growth and international expansion of our magazines as well as to development projects in the electronic media field. Our participation in the development of digital TV and network communications are significant new growth sectors also for the new corporation."