Vobarno S.p.A. takes over Structo AB., a European leader in the field of special and drawn pipes

The third group in the sector, right behind the giant groups Mannesman and Vallourec, comes into being

Future objectives -The Stock Market

Vobarno S.p.A. (welded and drawn steel tubes, turnover 40 million Euro), formerly a part of the Falck group, now an associated company of the international investment fund Morningside Italia, takes over Structo AB (turnover 30 million Euro), a company operating in the same production sector and with an established leadership at European level in the range of products complementary in type to those produced by Vobarno S.p.A.

The value of the takeover operation is 10 million Euro.
The new company, controlled by Vobarno S.p.A., will take on the name Structo S.p.A. and its Managing Director will be Kaj Hagman, the present managing director of Structo AB.

The new group assumes its position at the top of the market in the production of tubes for mechanics, hydraulics and the automobile industry. Its strength is in the ability to satisfy any demand coming from the reference markets.

It is envisaged that the integration between the two companies will lead to an increase in business of about 50% by the year 2001. Such an increase will be achieved by way of marketing synergy between the two companies and by way of a plan which will lead to an integrated common range of welded and cool drawn tubes.

Structo S.p.A. will become the third group in Europe in the production of special and drawn tubes competing with the giants of the sector, Mannesman and Vallourec.

The operation began in 1996 when Morningside Italia took over Vobarno S.p.A. from the Falck group. There then followed two years of complete company restructuring and of strengthening the core business of Vobarno S.p.A. (welded and cool drawn tubes).

At the beginning of July this year Vobarno S.p.A. issued a capital in order to take over Structo AB together with a bond issue for an overall sum of 10 billion Euro. This was underwritten by Investco a merchant bank of the Belgian banking group Almanij-KBC.
Vobarno S.p.A. is now controlled by Morningside (76%) and Investco (24%).


Different backgrounds

As companies, Vobarno S.p.A. and Structo AB. have different backgrounds. While Structo's roots lie in 16th century ironworks in the Swedish province of Värmland, Vobarno began manufacturing bar iron as late as 1865 and pipes in the early 1940s.
Vobarno S.p.A. market a wide range of welded and drawn tubes, mainly in smaller dimensions. For many years, Structo AB. have specialised in cold-drawn, roller-burnished tubes up to 250 mm in diameter, mainly for the hydraulic industry.

These differences can only be seen as advantages now that the companies are merging. Both have well-equipped production units that will be fully operational from the first day of the new organisation. In the current market conditions, 80-90% of the existing production capacity are used.


Synergetic effect in the long run

The great synergetic effects of the merger will be in marketing. By coordinating their marketing resources, agents, wholesalers and subsidiaries, the new company will establish a new profile.
Briefly, the new profile is based on transforming the entire new organisation from a supplier of specific products to an equal partner to the vehicle and hydraulic industry, with heavy responsabilities for product development, delivery logistics, material development and technology.

Recent analyses indicate that the new Structo has good opportunities to challenge the mayor actors on the market in a few years.

Further information can be obtained from:

Vobarno S.p.A.
Italy
- Email: acpizzorno@hsl.it
- Contact: Anna Cristina Pizzorno