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Sandvik Group

The Board proposes cancellation of repurchased shares and redemption of shares corresponding to SEK 4,000 M

Sandvik's earnings trend, cash flow and strong balance sheet provide the Board of Directors the possibility of proposing an extraordinary distribution in addition to the ordinary dividend of SEK 4.0 billion, or about SEK 16 per share.

It is proposed that the extraordinary distribution be effected through the redemption of shares.

The total distributed amount, including the proposed dividend of SEK 11 per share, amounts to SEK 6.7 billion, or SEK 27 per share.

The distribution should be viewed as part of Sandvik's goal in the long term to enhance the efficiency of the company's capital structure and, consequently, maximize value for the company's shareholders. Accordingly, the proposal of an extraordinary distribution through redemption replaces the earlier buyback program. It is proposed that the repurchased shares totaling 16,522,000 be canceled through a decision at the Annual General Meeting on 3 May. Use of redemption for the distribution provides the shareholders the freedom to choose between redeeming the shares or selling the redemption rights and thereby retaining their Sandvik shares. As a result, the method is effective for Sandvik's shareholders and, relative to other distribution methods, yields a positive effect on earnings per share.

In brief, the proposal involves the following process:

- Information about the redemption price and the redemption ratio will be provided in conjunction with the invitation to the Annual General Meeting to be held 3 May.
- The Annual General Meeting on 3 May 2005 decides on the redemption proposal.
- The record date is set directly at the Annual General Meeting.
- Shareholders will be provided the opportunity to trade in redemption rights during the application period, which is planned for the latter part of May and first part of June.
- An Extraordinary General Meeting in Sandvik decides on the redemption after the application period has expired.
- Payment of the redemption amount is expected in the beginning of July.
- Information brochure about the offering will be sent to shareholders prior to the application period.
- The usual conditions for the process apply.

Sandviken, 9 February 2005

Sandvik AB; (publ)

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