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RHI Magnesita NV on Friday said it has agreed to buy a 65% shareholding in Jinan New Emei Industries Co Ltd for €40 million.
RHI is a Vienna-based supplier of refractory products.
Jinan New Emei is a producer of refractory slide gate plates and systems, nozzles and mixes for use in steel flow control, employing over 1,300 people and headquartered in Shandong province, China.
RHI said Jinan New Eme’s main asset is a recently commissioned, modern facility in Laiwu, Shandong province.
‘The acquisition will enable the group to expand its product range in steel flow control refractories and its solutions contract offering in the Chinese domestic market, both of which are key strategic priorities. The acquisition will also give access to substantial new customer relationships in China and deliver additional production capacity for increasing supply of refractories in both China and the wider East Asia region,’ RHI explained.
In 2021, Jinan New Eme recorded a pretax profit of €5 million and had €114 million gross assets at December 31, 2021. RHI added that the business performed ‘well’ in 2022, delivering growth in both revenue and profit.
Under the terms of the agreement, RHI will acquire an initial 65% shareholding in Jinan New Eme for €40 million. 80% of the payment is payable on completion of the acquisition, whilst the remaining 20% will be payable on the first anniversary of completion.
RHI expects the acquisition to complete in the first of 2023.
It added that it also plans to acquire the remaining 35% of Jinan New Emei shares in exchange for a deferred payment, payable in 2026. It explained that the amount payable will be calculated at an agreed multiple of the average annual earnings before interest, tax, depreciation and amortisation delivered by Jinan New Emei over the three-year period from 2023 to 2025.
Chief Executive Stefan Borgas said: ‘China is the largest steel market in 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 solutions contract offering for our steel customers, enabling us to better serve our domestic customers in China and in the wider East Asia region.’
RHI shares were up 1.6% to 2,502.00 pence each in London on Friday morning.
By Sophie Rose, Alliance News reporter
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