21st Nov 2022 10:47
(Alliance News) - RHI Magnesita NV on Monday said it has bought an Indian refractory business via a share swap agreement, in exchange for shares in its subsidiary, RHI Magnesita India Ltd.
The Vienna-based high‐grade refractory products, systems and solutions provider acquired Dalmia Bharat Refractories Ltd, an India-based producer of high alumina refractory bricks for the Indian cement industry.
Dalmia Barat will be transferred into Dalmia OCL Ltd, or DOCL, prior to its acquisition by RHI Magnesita India Ltd.
RHI Magnesita India will acquire all outstanding shares in DOCL in exchange for 27 million new company shares. Based on its closing share price on November 18, the consideration shares had a value of EUR212 million.
RHI Magnesita will consolidate the company's earnings, and EUR 54 million of net debt held by DOCL through its majority shareholding in RHI Magnesita India, resulting in a marginal increase in gearing at group level.
After the acquisition, the group's shareholding in RHI Magnesita India will reduce from its current level of 70% to 60%, and Dalmia Bharat and its minority shareholders will hold a combined 14% stake in RHI Magnesita India.
The transaction is expected to complete in the first quarter of 2023.
"We see material financial and operational benefits from the addition of the Dalmia Bharat Refractories business to our existing network, which will enable us to increasingly serve our customers with a 'local for local' approach in India and offer a broader range of products, in particular in the Industrial segment, in which RHI Magnesita is currently under-represented," said Chief Executive Stefan Borgas.
"This transaction demonstrates our ability to continue to grow our business in India where the outlook for the refractory industry is strong, at a time when demand in other geographies is weakening."
RHI Magnesita warned there had been a slippage of some orders since its last trading update, as well as a weakening in the 2023 order book.
It said there was a risk that changes to the timing of shipments and associated customer payments meant it might not achieve its target to reduce net debt by the year end to 2.4x, although it still expects the 2.7x recorded at June 30.
However, it remains "comfortably on track" to meet consensus expectations for earnings before interest, tax and amortisation in 2022.
RHS Magnesita shares were trading 5.2% lower at 2,130.00 pence each in London on Monday morning.
By Holly Beveridge; [email protected]
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