F-Secure Corporation’s Board of Directors has decided to pursue
towards the separation of the company’s Consumer Security business
into a new listed company and has approved a demerger plan
F-Secure Corporation, Insider Information,
February 17, 2022, at 08.00 am EET
F-Secure Corporation’s Board of
Directors has decided to pursue towards the separation of the
company’s Consumer Security business into a new listed company and
has approved a demerger plan
NOT FOR DISCLOSURE OR DISTRIBUTION IN OR INTO
THE UNITED STATES, OR IN ANY OTHER JURISDICTION WHERE DISCLOSURE OR
DISTRIBUTION WOULD BE PROHIBITED BY APPLICABLE LAW.
The Board of Directors of F-Secure Corporation
(the “Company”) has decided to pursue the
separation of the Company’s Consumer Security business through a
partial demerger. It is planned that the Consumer Security business
will be transferred into a new independent company to be named
F-Secure Corporation (“F-Secure”) and to be
established in connection with the demerger (the
“Demerger”). The Demerger is expected to become
effective as of June 30, 2022, and the trading in F-Secure’s shares
is expected to commence on the official list of Nasdaq Helsinki
Ltd. (“Nasdaq Helsinki”) on July 1, 2022 or as
soon as possible thereafter. In connection with the Demerger, the
Company will retain its Corporate Security business, which is
planned to be renamed and launched by the end of March as
WithSecure Corporation (“WithSecure”).
Highlights
- The Board of Directors has completed a review and evaluation of
strategic options, resulting in the decision to pursue a separation
of the Company’s Consumer Security business into a new independent
company to be named F-Secure Corporation. The existing Company will
retain its Corporate Security business, which is planned to be
renamed WithSecure Corporation.
- In the view of the Board of Directors, the Demerger has, among
other things, potential for shareholder value creation for both
companies and it would enable them to better serve and meet the
specific needs of their respective customers and partners.
- The transaction will be implemented through a partial demerger
of the Company, in which shares in the newly established F-Secure
will be delivered to the Company’s shareholders. Upon completion,
the Company’s shareholders will receive as demerger consideration
one (1) share in F-Secure for each share they hold in the
Company.
- The Demerger is subject to approval by an Extraordinary General
Meeting of the Company, expected to be held in May 2022. The
completion of the Demerger is expected to become effective as of
June 30, 2022.
- The intention is that Pertti Ervi be appointed as the Chairman
of the Board of the new Consumer Security company F-Secure and Timo
Laaksonen as the President and CEO of F-Secure.
- The intention is that Risto Siilasmaa will continue as the
Chairman of the Board of the Company and that Juhani Hintikka will
continue as the President and CEO of the Company.
- Certain F-Secure shareholders, including Risto Siilasmaa,
Mandatum Life Insurance Company Limited, Ilmarinen Mutual Pension
Insurance Company, Elo Mutual Pension Insurance Company, Varma
Mutual Pension Insurance Company and Kaleva Mutual Insurance
Company, holding in the aggregate approximately 50.6 percent of the
shares and votes in the Company, have, subject to certain customary
conditions, irrevocably undertaken to attend the Company’s
Extraordinary General Meeting and vote in favor of the Demerger
with all the shares they hold on the date of record.
- In conjunction with the preparations for the Demerger, the
Company is investigating alternatives for an optimal capital
structure, one possible alternative being to raise funding by way
of a share issue to finance the implementation of the growth
strategy relating to its Corporate Security business.
Risto Siilasmaa, Chairman of the Board of the Company, comments:
“The optimal business structure for F-Secure has been under
consideration for some time. Now, when both businesses have reached
the EUR 100 million revenue milestone, we feel it is the right time
for our customers, personnel and shareholders to pursue the
separation of F-Secure’s consumer security business. At the same
time, we are planning to list it as a separate company on the
official list of Nasdaq Helsinki. We believe that the planned
demerger has potential for shareholder value creation for both the
new consumer security company as well as for the corporate security
company.”
Juhani Hintikka, President & CEO of the Company, comments:
“I am really pleased to be able to announce the contemplated
demerger of our consumer security business. I believe this would be
the right time to pursue this change in our business to create two
great companies, which would benefit from their current strong
momentum. The demerger would enable us to serve our end customers
even better from two separate companies, which would be more
focused on the differing needs of our customers. These companies
would also have different financial profiles, which would support
shareholder value creation in the long term. I believe that the
planned demerger would create two even more successful companies
and offer new, exciting opportunities also for our employees.”
Transaction overview
The Board of Directors of the Company has
decided to pursue the separation of the Company’s Consumer Security
business and has today on February 17, 2022 approved a demerger
plan according to which all assets and liabilities of the Company’s
Consumer Security business shall be transferred to a company to be
incorporated in connection with the partial demerger and to be
named F-Secure Corporation. The decision is based on the outcome of
a review and evaluation of different strategic options, including
the possible separation of the Company’s Consumer Security business
as an independent listed company. The evaluation process was
initiated by the Company’s Board of Directors and announced by the
Company in August 2021.
According to the demerger plan, the Company will
retain the assets and liabilities related to its corporate business
and is planned to be renamed as WithSecure Corporation in
connection with the Demerger.
Upon the completion of the Demerger,
shareholders of the Company will receive as demerger consideration
one (1) share in F-Secure for each share they hold in the Company;
that is, the demerger consideration shares will be issued to the
Company’s shareholders in proportion to their existing
shareholdings with a ratio of 1:1. The Company’s shareholders will
retain their shareholdings in WithSecure.
The Demerger is subject to, among other things,
approval by a majority of two-thirds of votes cast and shares
represented in the Company’s Extraordinary General Meeting. The
Company will publish a notice to the Extraordinary General Meeting
separately at a later stage. The Demerger is expected to become
effective as of June 30, 2022. The Company intends to apply for the
shares in F-Secure to be admitted to trading on the official list
of Nasdaq Helsinki. The trading in F-Secure’s shares on Nasdaq
Helsinki is expected to begin on or about July 1, 2022, or as soon
as reasonably possible thereafter. The Demerger will not affect the
listing of, or trading in, the shares of the Company.
The demerger plan is attached in its entirety to
this stock exchange release and contains information on, among
other things, the demerger consideration to the Company’s
shareholders, the planned time for the completion of the Demerger
and the allocation of the Company’s assets and liabilities between
F-Secure and WithSecure (Appendix 1).
Background and strategic rationale for
the Demerger
During the past few years, the Company has
successfully transformed its operations and today comprises two
strong businesses, Consumer Security and Corporate Security, which
have good opportunities to grow in their respective main markets.
The Board of Directors of the Company expects that the Demerger
will strengthen the preconditions for shareholder value creation
both in WithSecure as well as in F-Secure.
- The Demerger will enable WithSecure and F-Secure to better
serve and meet the specific needs of their respective customers and
partners
- The Demerger will clarify the strategic focus of F-Secure and
WithSecure to capture the growth potential of consumer and
corporate security markets
- The Demerger will accelerate the speed of execution and
increase competitiveness of F-Secure and WithSecure
- The Demerger will allow for optimal capital allocation
- The Demerger will clarify the equity stories with different
value creation profiles
Exploring strategic alternatives for
optimal capital structure
In conjunction with the preparations for the
Demerger, the Company is investigating strategic alternatives for
an optimal capital structure, one potential alternative being to
raise funding by way of a share issue. The proceeds from the
potential share issue would remain with the Company and finance the
implementation of the Company’s growth strategy relating to its
Corporate Security business.
Certain preliminary unaudited
illustrative carve-out financial information of
F-Secure
The following certain preliminary, unaudited and
illustrative carve-out financial information of F-Secure (Consumer
Security Business) has been prepared on a carve-out basis and
derived from the Company’s historical consolidated financial
statements for the years ended 31 December 2021, 2020 and 2019. For
more information on the basis of preparation, sources of financial
information, definitions for the alternative performance measures
and reconciliations, refer to Appendix 2 of this release.
(EUR million) |
2021 |
2020 |
2019 |
Revenue |
106.3 |
100.1 |
94.8 |
Adjusted EBITDA |
47.4 |
46.7 |
40.1 |
Adjusted EBITDA margin, % |
44.6% |
46.6% |
42.3% |
Adjusted EBITA |
47.2 |
46.5 |
39.9 |
Adjusted EBITA margin, % |
44.4% |
46.5% |
42.0% |
Adjusted EBIT |
45.9 |
44.7 |
37.7 |
Adjusted EBIT margin, % |
43.2% |
44.6% |
39.8% |
EBIT |
43.5 |
44.7 |
37.0 |
Mid-term financial targets for
F-Secure
Growth Target: High single digit organic revenue growth.
Profitability Target: After initial growth investments, adjusted
EBITA margin of above 42%.
Certain preliminary unaudited
illustrative financial information of WithSecure
The following certain preliminary unaudited
illustrative financial information of WithSecure is derived from
the Company’s consolidated financial statements for the years ended
31 December 2021, 2020 and 2019 to illustrate WithSecure’s
continuing operations as if the Demerger would have taken place.
For more information on the basis of preparation, sources of
financial information, definitions for the alternative performance
measures and reconciliations, refer to Appendix 2 of this
release.
(EUR million) |
2021 |
2020 |
2019 |
Revenue |
130.0 |
120.1 |
122.5 |
Adjusted EBITDA |
-10.8 |
-10.9 |
-16.8 |
Adjusted EBITDA margin, % |
-8.3% |
-9.1% |
-13.7% |
Adjusted EBITA |
-17.2 |
-18.0 |
-23.2 |
Adjusted EBITA margin, % |
-13.2% |
-15.0% |
-18.9% |
Adjusted EBIT |
-20.6 |
-21.7 |
-28.0 |
Adjusted EBIT margin, % |
-15.8% |
-18.1% |
-22.9% |
EBIT |
-25.7 |
-24.9 |
-29.7 |
Mid-term financial targets for
WithSecure
Growth Target: To double revenue organically by
the end of 2025. Profitability Target: Adjusted EBITDA breakeven by
the end of 2023 and adjusted EBITDA margin of some 20% by 2025.
Financing arrangements
As is customary, the Company has entered into
negotiations with its financiers to obtain the necessary consents,
confirmations and waivers for its financing agreements in relation
to the completion of the Demerger.
Board of Directors and management of
WithSecure and F-Secure
The Annual General Meeting of the Company to be
held on March 16, 2022 will elect the members of the Board of
Directors of WithSecure. The intention is that Risto Siilasmaa be
appointed as the Chairman of the Board of WithSecure and Pertti
Ervi will be proposed to continue in the Board of Directors of the
Company. Juhani Hintikka will continue as the President and CEO and
Tom Jansson as the Chief Financial Officer of WithSecure.
The Extraordinary General Meeting resolving on
the Demerger will also elect the members of the Board of Directors
of F-Secure for a term commencing upon the completion of the
Demerger. The intention is that Pertti Ervi be appointed as the
Chairman of the Board of the new consumer security company F-Secure
and Risto Siilasmaa be proposed to be elected as a member of the
Board. Timo Laaksonen will be the President and CEO and Sari
Somerkallio the Chief Financial Officer of F-Secure.
Shareholder support
Certain major F-Secure shareholders, including
Risto Siilasmaa, Mandatum Life Insurance Company Limited, Ilmarinen
Mutual Pension Insurance Company, Elo Mutual Pension Insurance
Company, Varma Mutual Pension Insurance Company and Kaleva Mutual
Insurance Company, holding in the aggregate approximately 50.6 per
cent of the shares and votes in the Company, have, subject to
certain customary conditions, irrevocably undertaken to attend the
Company’s Extraordinary General Meeting and vote, with respect to
all shares they hold, in favor of the Demerger.
Advance tax ruling
The Company has received an advance tax ruling,
which is legally binding, from the Finnish Tax Administration on
the tax treatment of the Demerger. According to the advance tax
ruling, the Demerger will be treated as a partial demerger as
defined in section 52c, subsection 1, paragraph 2 of the
Finnish Business Income Tax Act, and therefore, the Demerger is
treated as tax neutral, and it does not cause any direct income tax
consequences for the Company. The demerger should not cause any
direct income tax consequences for the shareholders either (subject
to verification by local tax advisor in country of residence of
shareholders outside of Finland).
Risks relating to the
Demerger
The Demerger involves risks, many of which will
be inherent to the Transaction and the respective businesses of
WithSecure and F-Secure. After the Demerger, WithSecure and
F-Secure may not be able to maintain the market position that they
have enjoyed as a single company. Pursuant to the Finnish Companies
Act, both WithSecure and F-Secure are jointly liable for the debts
of the demerging company that have arisen prior to the registration
of the completion of the Demerger.
Risks related to the Demerger and F-Secure as an
independent company include but are not limited to the
following:
- There is no certainty that the Demerger will be completed, or
the completion may be delayed, and any delay in the completion of
the Demerger could result in increased expenses or loss of
alternative business opportunities
- F-Secure may not be able to implement its business organization
and its independent strategy in the manner and timeframe currently
anticipated, and it may not be able to realize any or all of the
anticipated benefits of the Demerger
- F-Secure’s business operations will be dependent on certain
functions provided by WithSecure under the transitional services
agreement, and WithSecure’s inability to provide these functions
would have a material adverse effect on F-Secure’s business
operations
WithSecure will provide more detailed
information about the risks related to the planned Demerger in its
Q1 2022 Interim Report. F-Secure will provide more detailed
information about the risks related to the planned Demerger in its
demerger and listing prospectus.
Demerger and listing
prospectus
The Company will publish a demerger and listing
prospectus, which will contain more detailed information on the
contemplated Demerger and F-Secure. The demerger and listing
prospectus is expected to be available in May 2022.
Employees
The Company will commence change negotiations in
Finland in accordance with the Co-operation Act to negotiate on the
planned reorganization that is connected to the contemplated
separation of the Company’s Consumer Security business. Similar
local employee processes are also commenced in other countries
where the plans may lead to potential changes to the employees to
the extent required by local legislation. The potential personnel
reductions are estimated to be out of 1,700 employees a maximum of
24 employees globally, out of which 9 in Finland. Change
negotiations will commence in Finland on February 22, 2022,
covering all employees in Finland. The negotiations are expected to
be finalized during March 2022.
Subject to the approval of the Extraordinary
General Meeting and the completion of the Demerger, all the
Company’s employees belonging to the Consumer Security business in
Finland at the moment of completion of the Demerger would transfer
to the service of F-Secure as existing employees.
Advisors to the Company
Carnegie Investment Bank AB, Finland Branch acts
as the sole financial advisor in the partial demerger and the
potential share issue. Castrén & Snellman Attorneys Ltd acts as
the legal advisor to the Company. Hill+Knowlton Strategies acts as
the communication advisor.
Webcast
Risto Siilasmaa (Chairman of the Board), Juhani
Hintikka (CEO), Tom Jansson (CFO) and Timo Laaksonen (EVP Consumer
Security) will present the plan for the contemplated Demerger in
the Company’s 2021 results webcast that is held today, February 17,
2022 at 14:00 EET. The webcast will be held in English and can be
accessed at https://f-secure.videosync.fi/2022-02-17-fsirq4/.
Questions are to be submitted in written format in the webcast
portal.
Analysts following F-Secure are invited to the
presentation at the company headquarters, Tammasaarenkatu 7,
Helsinki, Finland.
The presentation materials and the webcast
recording will be available later on the Company’s website at
www.f-secure.com.
Contact
information:
Tom Jansson CFO +358 40 700 1849
investor-relations@f-secure.com Demerger website:
https://www.f-secure.com/en/investors/demerger
Appendix 1: The demerger plan and its appendices Appendix 2:
Certain preliminary unaudited illustrative financial information of
F-Secure and WithSecure
Important notice
This release is not an offer of demerger
consideration shares in the United States, and it is not intended
for distribution in or into the United States or in any other
jurisdiction in which such distribution of this release would be
prohibited by applicable law. The demerger consideration shares
have not been registered and will not be registered under the U.S.
Securities Act of 1933 (the “Securities Act”), and may not be
offered, sold or delivered within or into the United States, except
pursuant to an applicable exemption of, or in a transaction not
subject to, the Securities Act.
This release does not constitute an offer of or
an invitation by or on behalf of, F-Secure Corporation, or any
other person, to purchase any securities.
This release does not constitute a notice to an
Extraordinary General Meeting or a demerger and listing prospectus.
Any decision with respect the proposed demerger of F-Secure
Corporation should be made solely on the basis of information
contained to be contained in the actual notices to the
Extraordinary General Meeting of F-Secure Corporation, and the
demerger and listing prospectus related to the demerger as well as
on the independent analysis of the information contained therein.
Investors are encouraged to familiarise themselves with the
demerger and listing prospectus for more complete information about
the future F-Secure Corporation and its securities and the
demerger.
This release includes “forward-looking
statements” that are based on present plans, estimates, projections
and expectations and are not guarantees of future performance. They
are based on certain expectations and assumptions, which, even
though they seem to be reasonable at present, may turn out to be
incorrect. Shareholders should not rely on these forward-looking
statements. Numerous factors may cause the actual results of
operations or financial condition of the future entity to differ
materially from those expressed or implied in the forward-looking
statements. Neither F-Secure Corporation, nor any of its respective
affiliates, advisors or representatives, or any other person
undertake any obligation to review or confirm or to release
publicly any revisions to any forward-looking statements to reflect
events that occur or circumstances that arise after the date of
this release.
This release includes estimates relating to the
benefits expected to arise from the potential separation of the
business operations of F-Secure Corporation’s consumer security
business, which have been prepared by F-Secure Corporation and are
based on a number of assumptions and judgments. Such estimates
present the expected future impact of the potential separation of
the business operations of F-Secure Corporation on the future
company’s business, financial condition and results of operations.
The assumptions relating to the estimated benefits and related
costs are inherently uncertain and are subject to a wide variety of
significant business, economic and competitive risks and
uncertainties that could cause the actual benefits from the
potential separation of the business operations of F-Secure
Corporation, if any, and related costs to differ materially from
the estimates in this release. Further, there can be no certainty
that the demerger will be completed in the manner and timeframe
described in this release, or at all.
- Appendix_1_Demerger_Plan_with_Schedules
- Appendix_2_Preliminary_financial_information
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