Earlier this month, the board of multinational Atlas Copco announced that it would propose to shareholders at its 2018 Annual General Meeting that the group should be split into two listed companies. Atlas Copco's Australian arm, which supplies rock excavation tools and plant and equipment (eg drill rigs) to the extractive industry, has advised that there will be no operational changes or impact to existing customers.
The second company, with the working name of “NewCo”, will focus on mining/civil engineering customers and encompass Atlas Copco’s Mining and Rock Excavation Technique business area and the Construction Tools division with related service operations. This side of the business was worth 3 billion Euro ($AUD4.2 billion) to Atlas Copco for the financial year ended 30 September, 2016, and comprised 12,000 employees worldwide. Atlas Copco shareholders will receive shares in NewCo in proportion to their existing shareholding.
Atlas Copco will focus more on its industrial business areas, which include the Compressor Technique, Vacuum Technique, Industrial Technique, Portable Energy division and Speciality Rental division.
“The two businesses have different demand drivers and demand characteristics”, Atlas Copco Group’s president and CEO Ronnie Leten said. “A split will increase their respective abilities to add value to customers, grow the business and attract talent.”
Indeed, according to Wayne Symes, the acting general manager of Atlas Copco Mining and Rock Excavation Australia, one of the biggest problems for the group’s mining and construction businesses has been competing for resources with Atlas Copco’s larger industrial businesses. “As a separate company with its own CEO, board of directors and management, [NewCo] will have full focus from the board for growth, expansion plans, new innovations, and so on,” Symes said.
No operational changes
A statement issued by Atlas Copco Mining and Rock Excavation Australia advised that there will be no operational changes to the division globally but the Construction Tools division and related services will be added. Nor are any operational changes anticipated in Australia either.
“There will be no changes operationally, our customers should not be impacted at all,” Symes said. “We have strong customer centres, professional people, excellent products and superior service. This will continue and in fact be strengthened as we can run operations even more focused. We have a number of branches around Australia where we share premises with other divisions. The plan is to stay in the same place and not move.”
The new company name is also not expected to result in a wholesale rebranding of the Mining and Rock Excavation division’s products. They will continue to use the Atlas Copco brand name under licence.
A shareholder vote to split the two companies will be held at the Atlas Copco Group’s AGM in April 2018. If it passes, a new CEO, board of directors and management teams will be appointed and NewCo will be listed on the Nasdaq Stockholm stock exchange as of May 2018.
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