Outokumpu and Avesta Sheffield announce the creation of AvestaPolarit, a world class international independent stainless steel company by merging Outokumpu Steel and Avesta Sheffield. AvestaPolarit will be the second largest stainless steel producer in the world.

AvestaPolarit will offer investors a new opportunity to focus on the attractive stainless steel segment.

The proposed Combination will take place via an exchange offer in which Avesta Sheffield shareholders will be offered one share of Outokumpu Steel in exchange for one Avesta Sheffield share. Outokumpu Steel will subsequently be renamed AvestaPolarit and will be listed on the OM Stockholm Stock Exchange. The offer is conditional upon regulatory approvals and a minimum 90% acceptance by Avesta Sheffield shareholders.

Following the exchange offer, Outokumpu will own 55% of AvestaPolarit and Avesta Sheffield shareholders 45%, assuming full acceptance by Avesta Sheffield shareholders. The proposed merger has the support of Avesta Sheffield's principal shareholder Corus Group, which holds 51% of the Avesta Sheffield shares. Outokumpu has agreed to reduce its ownership to no more than 40% within three years in order to allow for improved liquidity in AvestaPolarit shares.

Outokumpu Steel and Avesta Sheffield together employ some 8,700 people. Their main production facilities are in Finland, Sweden, the UK and the USA, and have a combined stainless steel slab capacity of about 1.7 million tonnes. The companies' combined sales amount to over EUR 3 billion.

"The strategic and synergistic fit of the two companies is excellent, and our intention is to deliver to our shareholders the inherent value in a focused stainless steel company", says Dr. Jyrki Juusela, CEO of Outokumpu.

"The merger combines the cost leadership position of Outokumpu Steel with the wide product range and extensive distribution network of Avesta Sheffield to create further opportunities in the fast growing stainless steel markets," says Mr. Stuart I. Pettifor, CEO of Avesta Sheffield.

In Tornio, Outokumpu Steel has the only fully integrated production process in the world, from captive chromium mineral resources to finished stainless steel products. Outokumpu Steel is best known in the market by its brand name, Polarit.

Avesta Sheffield has several production sites, a wide product range including value added processing and a worldwide distribution network.

Both companies have ongoing investment programmes totalling EUR 660 million for additional steel melting and coil processing capacity in Tornio, Avesta, Nyby and Sheffield, which will form the core of AvestaPolarit. These will be upgraded with an additional EUR 110 million in the Tornio melt shop and cold-rolling mill.

In addition to coil products, AvestaPolarit also has a number of other special product lines, including ferrochrome, hot-rolled plate, long products, precision strip, tubes and tube fittings.

Synergies of over EUR 100 million per annum, approximately 3.5% of net sales, have been identified and are expected to be fully realised by year 2005.

The underlying profitability of coil production will improve significantly as a result of increased sales and a major reduction in conversion costs.

AvestaPolarit's planned development programme creates the further opportunity to utilise melting and rolling assets as the foundation for future expansion both in Europe and globally.

AvestaPolarit will be incorporated in Finland. The main head office will be in Stockholm with a CEO's office in Espoo, Finland. Mr. Ossi Virolainen, Outokumpu, will be the CEO of AvestaPolarit and Mr. Stuart I. Pettifor, Avesta Sheffield, deputy CEO. Chairman of the Board of Directors will be Dr. Jyrki Juusela, Outokumpu and Vice Chairman of the Board of Directors will be Mr. Tony Pedder, Corus Group.

"By establishing AvestaPolarit as a separately listed company, investors will have the opportunity to participate in a world scale, highly focused, integrated stainless steel producer" says Mr. Ossi Virolainen, CEO of AvestaPolarit. "Given the attractive prospects for this business we feel investors will appreciate the investment opportunity presented by AvestaPolarit".

"The formation of AvestaPolarit is a very natural progression in developing our current holdings in Avesta Sheffield. We took the first step when we merged the previous British Steel stainless business with Avesta AB and formed Avesta Sheffield eight years ago," says Mr. John Bryant Joint CEO of Corus Group.

The Finnish State, which owns 40% of Outokumpu, has also expressed its full support for the Outokumpu Steel and Avesta Sheffield Combination, which will give AvestaPolarit and its shareholders a new strong platform for profitable growth.

Invitation to press conference Dr. Jyrki Juusela, CEO of Outokumpu, Mr. Tony Pedder, Chairman of Avesta Sheffield's Board, Mr. Stuart I. Pettifor, CEO of Avesta Sheffield and Mr. Ossi Virolainen, Deputy CEO of Outokumpu will be presenting the proposed merger between Outokumpu Steel and Avesta Sheffield at press conferences today September 28, at 9.30 hours (local time) in Helsinki at Hotel Kämp, Peilisali, Eteläesplanadi 29 and at 12.00 hours (local time) in Stockholm at Grand Hotel, Carl Larsson salen, Blasieholmskajen.

Representatives of the media, financial market analysts, banks and shareholders are welcome.

Presentations will be given in Finnish in Helsinki and English in Stockholm. Presentation graphics used in the presentations can be found on www.aboutmerge.com as of 9.30 hours Finnish time (8.30 Swedish time).

Contact persons:
Outokumpu
Katarina Lybeck, Senior Vice President – Corporate Communications,
tel. +358 9 421 2431 or +358 40 503 0750
Kari Lassila, Senior Vice President – Corporate Controller, tel. +358 9 421 2555

Avesta Sheffield
Inga Lundberg, Corporate Communications,
tel. +46 8 613 4419 or +46 70 656 5695
Ian Cooper, Chief Financial Officer, +46 8 613 3647

Corus Group
Anthony Hamilton, Investor Relations, +44 207 717 4503
Mike Hitchcock, Media Relations, +44 207 717 4502