Metso Divests Majority in Foundry Subsidiary

Sept. 25, 2008
Swedish iron foundry supplies wind-turbine components

Finland’s Metso Corp. has sold its Metso Foundries Karlstad AB subsidiary in Sweden to a private investor. The company will be renamed Heavycast AB, with a majority holding by the Finnish equity fund Primaca Group Oy. Metso Corp. is retaining a 16.7% stake.

Metso Foundries Karlstad AB, had been a division of Metso Paper. It supplies large-scale iron castings for use in wind generator components, diesel engine blocks, and "yankee cylinders" for paper machines. (Yankee cylinders are large-diameter castings with polished surfaces, used for drying paper during the production process.)

More than 80% of the foundry’s output is supplied to customers other than Metso Paper. More than half of its sales is comprised of orders from the wind-generator sector, which is seen as its largest growth market.

Metso reported the transaction has a value of about $22 million. Concurrent with the transaction, Metso announced a long-term supply agreement with Heavycast for yankee cylinders. Heavycast’s 120 will remain with the operation.

Primaca Group specializes in direct private equity placements, mainly in the Nordic region. Among its 16 portfolio companies is Uudenkaupungin Rautavalimo Oy, a steel foundry in Uusikaupunki, Finland.