RHI and Magnesita Merger Receives Approval, with Conditions
The merger control clearance by the European Commission represents an important next step toward the planned closing of the transaction in early November.
The EU Commission recently granted merger control clearance regarding the planned combination of the RHI Group and Magnesita Refratários S.A., subject to several conditions. The first condition is the divestment of dolomite production sites in Marone, Italy, and Lugones, Spain. These sites comprise RHI’s dolomite business (production, sale, etc.) in the European Economic Area. This condition will include an investment in a tunnel kiln in Marone, if the Lugones production site is not transferred.
The second condition is the divestment of a Magnesita production site in Oberhausen, Germany, which comprises the entire Oberhausen business (production, sale, etc. of magnesia-carbon brick and basic mixes) in the European Economic Area. Finally, the potential buyer will receive supply contracts for sintered magnesia amounting to a maximum of roughly 43,000 tons.
The conditions must be met within six months. The contribution to revenue of the two RHI sites totaled roughly €50 million (approximately $57.1 million) in the 2016 financial year and represents roughly 3% of the group’s revenue in 2016. RHI and Magnesita are currently holding intensive talks with several potential buyers. All interested parties intend to take over the production sites and the related businesses for the long term and to develop them further.
The merger control clearance by the European Commission represents an important next step toward the planned closing of the transaction in early November. The pending approvals required for the closing of the transaction are the merger control clearance in Brazil and the approval of the cross-border merger of RHI AG with its subsidiary RHI MAG NV in the Netherlands, by the RHI general meeting.
“With today’s milestone, we have come significantly closer to the planned merger with Magnesita—and thus a globally leading company in the refractory industry, which optimally combines the strengths of both companies,” said Stefan Borgas, CEO of RHI and the designated CEO of the future RHI-Magnesita Group.
The combination of RHI and Magnesita will reportedly enable the combined company to offer its customers a more comprehensive range of services and thus provide added value. Further significant value creation potential exists due to the realization of planned synergies and innovations based on the combined know-how of the companies.