LONDON, UK: RHI Magnesita has agreed to acquire a 65% shareholding in Jinan New Emei for a money consideration of ¥293 million (€40 million).
Jinan New Emei Industries Co. Ltd. is a number one producer of refractory slide gate plates and systems, nozzles and mixes to be used in metal flow control, using over 1,300 people and headquartered in Shandong province, China. Jinan New Emei’s main asset is a recently commissioned, modern facility in Laiwu, Shandong province with a extremely automated manufacturing capability of as much as eighty ktpa.
Jinan New Emei recorded revenue earlier than tax of ¥33 million (€5 million) within the year to 31 December 2021 and had Gross Assets of ¥829 million (€114 million) at 31 December 2021. The enterprise carried out well in 2022, delivering growth in each revenues and profits.
The acquisition will allow the RHI Magnesita to expand its product vary in metal flow management refractories and its options contract providing within the Chinese home market, each of that are key strategic priorities.
The acquisition will additionally give entry to substantial new buyer relationships in China and ship additional manufacturing capability for increasing provide of refractories in each China and the broader East Asia region.
The acquisition is anticipated to be accretive to Group earnings per share, with substantial alternatives to realise synergies from the mixture of Jinan New Emei with the Group’s existing refractory enterprise in China.
Under the phrases of the acquisition, RHI Magnesita will purchase an preliminary 65% shareholding for a money consideration of ¥293 million (€40 million). 80% of the preliminary consideration is payable on completion of the Acquisition, which is topic to competitors authority clearance and is anticipated to happen within the primary half of 2023.
The remaining 20% of the preliminary consideration is payable on the primary anniversary of completion of the Acquisition.
The Group has additionally dedicated to buying the remaining 35% of Jinan New Emei shares in exchange for a Deferred Consideration, payable in 2026, to be calculated at an agreed a number of of the common annual EBITDA delivered by Jinan New Emei over the three year interval from 2023 to 2025.
The Acquisition will be funded from RHI Magnesita’s existing dedicated and undrawn debt facilities and cash.
Commenting on the Acquisition, Stefan Borgas, Chief Executive, said: “This transaction represents an important step within the event of our flow management refractory enterprise in China and is directly aligned with our stated technique to develop through consolidation in fragmented new markets the place we’re currently under-represented. China is the largest metal market within the world, accounting for over 50% of global production, and the addition of Jinan New Emei to our existing Chinese operations will broaden our product and options contract providing for our metal customers, enabling us to higher serve our home customers in China and within the broader East Asia region.”