REG - RHI Magnesita N.V. - Acquisition of Seven Refractories

RHI Magnesita NVAnnouncement

21/04/2023 16:15

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RNS Number : 1118X  RHI Magnesita N.V.  21 April 2023

21 April 2023

 

RHI Magnesita N.V.

("RHI Magnesita" or "the Group")

 

Acquisition of Seven Refractories

 

RHI Magnesita announces the acquisition of the Europe, India and US operations
of Seven Refractories for cash consideration of approximately €93 million.

Seven Refractories

Seven Refractories is a specialist supplier of non-basic monolithic refractory
mixes with broad applications across all of the Group's customer segments
including iron and steel, cement, aluminium and non-ferrous metals. Seven
Refractories has customer relationships in 45 countries and a strong track
record of innovation, including the development of a range of environmentally
sustainable products and flexible manufacturing technologies. Seven
Refractories employs around 240 staff at its production sites in Slovenia,
India and the US and at its sales offices and service centres in Cyprus,
Germany, Italy and the United Kingdom.

Non-basic refractory mixes are expected to become increasingly important with
the development of new low CO(2) emitting manufacturing technologies within
the Group's key customer industries. Products offered by Seven Refractories
range from low temperature fireclay to ultra-high temperature zircon mixes,
high-grade alumina mixes and sustainable taphole clay with a low CO(2)
footprint.

Benefits of the Acquisition

The Acquisition will enable RHI Magnesita to offer a broader range of
non-basic refractory mixes and is expected to be highly complementary to the
Group's existing non-basic portfolio. Attractive potential synergies are
targeted through cross selling opportunities, logistics improvements,
increased recycling usage, procurement efficiencies and low capital intensity
brownfield expansion projects. The senior management of Seven Refractories,
including Chief Executive Officer Erik Zobec, will join the RHI Magnesita
Group to drive initiatives focused on non-basic monolithics following
completion of the Acquisition.

Acquisition details

The businesses to be purchased in the Acquisition recorded revenues of €105
million and Profit Before Tax of €11.4 million in the year to 31 December
2022 and had Gross Assets of €86.7 million at 31 December 2022. The
shareholders of the parent company of Seven Refractories, Seven Refractories
GmbH, are Hephaistos International B.V. (48.5%), a Dutch investment company
focused on founder-led and operated businesses, PE Holding GmbH (14.8%),
Vaalon Capital No 3 L.P. (6.5%) and the senior management of Seven
Refractories (30.2%).

The India based business of Seven Refractories consists of a 49% stake in RHI
Magnesita Seven Refractories Limited, formerly Dalmia Seven Refractories
Limited. RHI Magnesita already owns 51% of RHI Magnesita Seven Refractories
Limited following its acquisition of Dalmia OCL Limited in January 2023 and
will own 100% of this business following completion of the Acquisition.

The Acquisition is subject to standard closing conditions and is expected to
complete in the second half of 2023. The Acquisition will be funded from RHI
Magnesita's existing committed and undrawn facilities and cash.

 

Commenting on the Acquisition, Stefan Borgas, Chief Executive Officer of RHI
Magnesita, said:

"This transaction represents a significant step forward for RHI Magnesita in
non-basic refractory mixes, which is additive to our existing presence in this
market and highly complementary to our overall customer offering. We see
compelling opportunities to realise synergies through the integration of Seven
Refractories into our existing network and there is a strong alignment in
seeking to offer our customers more sustainable products with a low carbon
footprint. I am pleased to welcome this entrepreneurial team to our Group. RHI
Magnesita's network will enable them to continue to build the business even
more successfully on a truly global basis. Together we will continue to
execute our strategy to grow through consolidation."

Erik Zobec, Chief Executive Officer of Seven Refractories, said:

"The Seven Refractories team is delighted to be joining the RHI Magnesita
Group at this exciting stage in its development as the global leader in
refractories. Our specialist presence in the non-basic monolithics market will
be supported and driven forwards through this combination. We will continue to
serve our customers with the innovative products, technology leadership and
proven flexibility they have come to expect from us, whilst the additional
capabilities and global presence of RHI Magnesita will deliver a step change
in the breadth of products and services that we can offer to them."

 

For further enquiries, please contact:

Chris Bucknall, Head of Investor Relations

Tel +43 699 1870 6490

E‐mail: chris.bucknall@rhimagnesita.com
(mailto:chris.bucknall@rhimagnesita.com)

 

About RHI Magnesita

RHI Magnesita is the leading global supplier of high-grade refractory
products, systems and solutions which are critical for high-temperature
processes exceeding 1,200°C in a wide range of industries, including steel,
cement, non-ferrous metals and glass. With a vertically integrated value
chain, from raw materials to refractory products and full performance-based
solutions, RHI Magnesita serves customers around the world, with around 13,500
employees in 33 main production sites and more than 70 sales offices. RHI
Magnesita intends to leverage its leadership in terms of revenue, scale,
product portfolio and diversified geographic presence to target strategically
those countries and regions benefitting from more dynamic economic growth
prospects.

The Group maintains a premium listing on the Official list of the London Stock
Exchange (symbol: RHIM) and is a constituent of the FTSE 250 index, with a
secondary listing on the prime segment of the Vienna Stock Exchange (Wiener
Börse). For more information please visit: www.rhimagnesita.com
(http://www.rhimagnesita.com)

This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (596/2014/EU).

 

Definitions

 "Acquisition"                                    The acquisition by RHI Magnesita of Europe, India and US based refractory
                                                  businesses of Seven Refractories in exchange for cash consideration of €93
                                                  million. The entities to be transferred to RHI Magnesita are Seven
                                                  Refractories d.o.o. (100% stake), including certain subsidiaries of Seven
                                                  Refractories d.o.o. based in Europe and the US; Seven Refractories Deutschland
                                                  GmbH (75.5% stake with call option over minority stake); and the 49% stake in
                                                  RHI Magnesita Seven Refractories Limited (formerly Dalmia Seven Refractories
                                                  Limited) that is not already owned by RHI Magnesita following the acquisition
                                                  of Dalmia OCL Limited on 5 January 2023.
 "Profit Before Tax"                              Profit before tax attributable to the businesses and assets that are the
                                                  subject of the Acquisition, including a 49% share of the profit before tax
                                                  generated by RHI Magnesita Seven Refractories Limited, in which the Group
                                                  already holds a 51% controlling stake. Earnings from RHI Magnesita Seven
                                                  Refractories Limited are fully consolidated into the Group's financial
                                                  statements following the acquisition of Dalmia OCL Limited on 5 January 2023.
 "RHI Magnesita" or "the Company" or "the Group"  RHI Magnesita N.V. and its subsidiary companies
 "Seven Refractories"                             A group of companies currently owned and controlled by Seven Refractories GmbH
                                                  carrying out refractory business under the trading name of Seven Refractories.
 "US"                                             United States of America

 

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