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Outokumpu's Joint Venture with Lennox
Outokumpu OYJ
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Company: Outokumpu OYJ, Finland
Attn: Investor and Media Relations

Outokumpu to strengthen its position in the heat transfer industry by joining forces with Lennox International of the US

Outokumpu Oyj (HEX:OUT1V) of Finland and Lennox International Inc. (NYSE:LII) of the US have signed a memorandum of agreement for the formation of a joint venture, which will include a major part of the worldwide heat transfer segment of Lennox International Inc. Outokumpu's ownership will be 55%, and it will pay USD 55 million for its share (EUR 62.5 million). Lennox International retains 45% ownership. After a period of three years Outokumpu will have the option to purchase the remainder of the business. The agreement is subject to regulatory approvals and completion of the final agreement, which is targeted mid-year 2002.

As part of the agreement, a separate 50-50% technology joint venture will be established. The target is to strengthen the leadership position of both parties in the heat, ventilation, air-conditioning and refrigeration industry (HVAC). The development of new innovative applications will play a key role.

- Formation of the joint venture is well in line with Outokumpu's strategy focusing on growth and transformation complemented with knowledge and know-how. Outokumpu Copper Products' strategy is based on heat transfer and electrical conductivity, and today heat transfer represents some 40% of our net sales. In ACR tube Outokumpu is one of the global key players and with this joint venture we will consolidate our position in more value-added components. We have been supplying Lennox with air-conditioning and refrigeration tube for several years. As a partner in the joint venture, Outokumpu will move further in the value chain and bring in its extensive knowledge of the heat transfer properties of copper, thus being able to expand service to a wider customer-base, said Dr. Kalevi Nikkila, President of Outokumpu Copper Products Oy.

This is the first time a manufacturer of air-conditioning and refrigeration (ACR) tube and a manufacturer of heat transfer coil will, to this extent, partner and bring together their core competencies to improve customer service and better understand the customer's requirements and the future potential of the heat transfer industry.

Included in the joint venture are six OEM and Commercial Coil plants of Lennox: two in Grenada, Mississippi; one in Juarez, Mexico, in Cremieu, France, in Torreglia, Italy, and in Prague the Czech Republic; as well as Livernois Engineering in Dearborn, Michigan selling technology and appliances. The joint venture will employ some 2 200 people. The net sales of this business in 2001 were USD 200 million (EUR 227 million).

Outokumpu manufactures high-quality ACR copper tube in the US, Asia and Europe for a variety of appliances and systems. The company's research center in Franklin, KY, US has developed a special technology to produce thin wall, inner-grooved welded tube. Additionally, similar seamless tubes are manufactured by Outokumpu Cast & Roll TM technology in Europe and Asia.

Users of Lennox's Heatcraft products included in the joint venture are primarily manufacturers of heating, ventilation, air-conditioning and refrigeration (HVAC) appliances and systems. The joint venture will also be a supplier of complete customer designed heat transfer coils for the commercial, industrial, transportation and replacement markets. Today, Lennox has a leading position on these markets in the US.

- We are partnering with the Outokumpu to realize synergies between the two companies, said Bob Schjerven, CEO of Lennox International. This joint venture brings together the resources and reach of two highly respected global businesses, both leaders in their respective technologies. Merging these two adjacent links in the supply chain will drive unparalleled efficiencies in customer service and working capital reduction. This partnership will also allow us to focus on strengthening our branded finished good business segment and improving our effectiveness in providing value-added products and services in our core heating, cooling and refrigeration markets.

The joint venture will utilize Outokumpu's strong business expertise in Europe and Asia, where Outokumpu has a good reputation and strong market position in the high-quality air-conditioning tube, and Heatcraft's strong global brand and expertise in heat transfer coil designs and manufacture.

     Tel: + 358 9 421 2438   Fax: + 358 9 421 2429
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