In a expanding move to strengthen its position in the alumina-based refractories market, Vienna-based RHI Magnesita has unveiled plans to acquire Resco Group, a U.S.-based producer of alumina and refractories, in a deal valued at up to $430 million.
This acquisition aligns with RHI Magnesita’s overarching strategy to bolster its ‘local for local’ production model, aimed at enhancing customer offerings, streamlining supply chains, and boosting response times and supply security. CEO Stefan Borgas emphasized the strategic fit of the acquisition, underscoring its potential to generate synergies benefiting both entities.
The cash consideration for the acquisition is anticipated to be around $324 million, with a potential upper cap of about $342 million if completion extends beyond 18 months from signing. Financing will be sourced from RHI Magnesita’s existing liquidity and a new committed facility of 200 million euros ($216 million).
Resco Group posted unaudited revenues of $252 million in 2023, with a pre-tax profit of $20 million. The acquisition is expected to yield synergies through the reorganization of the combined supply chain, incurring one-time costs estimated at 60 million euros. This restructuring, which includes adjustments at non-U.S. plants, is anticipated to span approximately two years.
The completion of the acquisition is contingent upon customary closing conditions, including approval from merger control authorities, and is slated for the latter half of this year. Following the transaction, the amalgamated entity will oversee 15 production facilities across the United States, Canada, and Mexico, according to Resco Group.
Resco Group is presently under the ownership of Balmoral Funds, a California-based private equity firm managing assets worth approximately $1.5 billion. For RHI Magnesita, the acquisition of Resco Group represents a calculated step towards fortifying its foothold in the global refractories market and seizing growth opportunities.
(Source: Trading View | SaltWire | XM)
