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RHI Magnesita shares rise: RHI Magnesita interested in acquiring Resco Group |  04/02/24

RHI Magnesita shares rise: RHI Magnesita interested in acquiring Resco Group | 04/02/24

The Austrian-Brazilian refractories group RHI Magnesita today announced its intention to acquire the American Resco Group, a manufacturer of alumina stones and refractory materials, for an enterprise value of $430 million.

Resco operates seven plants, two raw material sites in the United States and two operations in the United Kingdom and Canada.

The US group is currently owned by Balmoral Funds, a California-based private equity RIA that manages $1.5 billion in assets, RHI said in a statement on Easter Monday. In 2023, Resco reported unaudited sales of $252 million, pre-tax earnings of $20 million and total assets of $191 million.

Regarding the reason for the acquisition, RHI said that currently about 50 percent of U.S. sales are not produced in the country. The acquisition will increase domestic production by moving significant amounts of production from factories outside the United States to Resco's manufacturing facilities in the United States.

Purchasing also naturally affects the balance sheet. “In the medium term, synergies will arise from the restructuring of the joint supply chain, which is expected to take approximately two years and incur one-time costs of €60 million, including restructuring efforts at factories outside the US,” listed RHI said.

Stefan Borjas, CEO of RHI, said of the acquisition: “The acquisition advances our ‘local for local’ production strategy and will shorten supply chains, improve the speed of our response and increase the security of supply of refractory materials to our customers.”

RHI shares temporarily rose 0.74% to 39.68 euros in Vienna.

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