Valmet Corp. and Neles Oyj said Friday that they have agreed to merge, forming a combined company that will provide enhanced growth opportunities and benefit from broader revenue and cost synergies.

Valmet provides technologies, automation systems and services for the pulp, paper and energy industries while Neles offers flow-control products such as valves used in oil-and-gas refining, pulp-and-paper manufacture and chemical industries.

"The transaction creates a global industrial leader with a bright future beyond what we could achieve separately," said Valmet Chairman Mikael Makinen. "Together our businesses are better positioned to drive innovation and leadership in sustainability."

The proposed combination will see Neles merged into Valmet, with Neles shareholders receiving 0.3277 new shares in Valmet for each share they hold in Neles.

Neles shareholders would own 18.8% of the combined company, with Valmet shareholders owning 81.2%.

The companies said the merger consideration, taking account of a possible extra 2 euros ($2.37) a share shareholder payout by Neles, implies a value per Neles share of EUR14.22 using Valmet's closing share price of EUR37.29 on Thursday.

Neles shares closed Thursday at EUR12.215.

Completion is expected on or about Jan. 1, 2022, subject to conditions.