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[October 2008]
Refractories Giant Created As Magnesita Acquires LWB
Magnesita Refratários SA (Contagem, Brazil), the South American manufacturer and service provider in the refractory industry with a leading position in the Latin American market, has signed an agreement to acquire Germany’s LWB Refractories - the world's leading supplier of dolomite based refractories - from Rhône Capital for €657 million in Enterprise Value. Magnesita is listed on the Bovespa (São Paulo Stock Exchange). Closing of the transaction is subject to regulatory approval.
Both Magnesita and LWB manufacture refractory products for industrial application, mainly for the steel and cement industries. This acquisition brings together the leading position of Magnesita in the magnesite market with LWB’s expertise as the world’s leading dolomite refractory supplier. “The combination of Magnesita and LWB will create the third largest refractory company in the world in terms of revenue. This is a milestone in Magnesita’s strategy to accelerate its international growth. It will strengthen both our market positions worldwide and our capacity to create value for our shareholders”, explained Ronaldo Iabrudi, CEO of Magnesita. “It is an attractive proposition to our shareholders because of the complementarity of the two businesses in terms of geography and products and the high level of cross selling opportunities. We are offering a fair price which is enhanced by synergies and supported by the commitment of Rhône Capital as a new shareholder in Magnesita.”
LWB Refractories, based in Hilden, Germany, was established in 2001, combining the experience and expertise of three century-old companies. Today LWB is a global refractory manufacturer and the world's leading dolomite refractory supplier for stainless and carbon steel applications and the cement market. The company employs approximately 2,000 people at production sites in Europe, USA and Asia as well as sales offices world-wide.
Magnesita has over the years developed a strong market position in magnesite refractory products backed by significant magnesite resources under its control and the combination of state of the art production technology in refractory products, strong research and development and a unique service oriented business model. Through this acquisition, Magnesita will provide clients with a broader product and service portfolio and a significant presence in all refractory markets.
The companies are highly complementary not only in terms of products but also in industry segments and geographically, with virtually no overlap. Therefore, the combination offers strong cross-selling potential through privileged access to existing clients in the steel, cement and lime industries and excellent opportunities to develop new markets, particularly in high growth areas such as Asia. In addition, Magnesita and LWB have access to extensive reserves of high quality refractory grade magnesite and dolomite from their own quarries which gives the company control over its key raw materials and unmatched cost advantages.
Mr Iabrudi added: “The combined high-quality product portfolio and global presence in all important refractory markets will deliver major benefits to our customers across the world and further strengthen the existing customer relationships of both companies. The expertise of LWB’s management and highly-skilled employees worldwide will be strategic to secure the leading market position and sustainable growth of Magnesita in future. We are confident a combined organisation with its global presence and growth dynamics will continue to be an attractive employer for existing employees and new talents”.
Magnesita expects to maintain all existing LWB sites and due to the complementarity of the businesses does not foresee the need for any restructuring measures of significance.
Alexander Röntgen, CEO of LWB, said: “We welcome this exciting opportunity to join Magnesita and are looking forward to working jointly with the Magnesita management and employees to create one of the leading refractory companies worldwide together. The combined group will offer a unique product portfolio and outstanding technology for supplying refractories to our clients and considerable opportunities for our employees”.
The combined business, on a pro forma basis and considering annualised 1H08 figures, totals annual revenues of €894 million and EBITDA of €219 million. It will employ around 8,000 staff around the world and be the third largest refractory company in the world by revenue.
www.grupomagnesita.com.br
ENDS