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RHI Magnesita Acquires Dalmia Bharat Refractories in Share Swap
Wednesday 23 November 2022

Austrian refractory products, systems and services supplier RHI Magnesita (LSE: RHIM) has acquired the Indian refractory business of Indian refractories manufacturer Dalmia Bharat Refractories Ltd. via a Share Swap Agreement, in exchange for 27m shares in RHI Magnesita India Ltd., a 70% owned subsidiary of the group, the group said.

Dalmia Bharat Refractories is one of the leading refractory producers in India with approximately 1,200 employees and production capacity of over 300 ktpa, from five refractory plants and raw material sites.

DBRL recorded adjusted EBITDA of INR 945 m (EUR 12m) in the year to 31 March 2022 and had Gross Assets of INR 13,925m (EUR 170 m) at 31 March 2022.

The acquisition will enable the group to increase its presence in the high growth Indian refractory market, with forecast steel production growth in India of 12% in 2022 and a 7-8% CAGR until 2030.

The production footprint (5 plants) and product offering of DBRL is highly complementary to the group's existing plant locations (4 plants) and product range with focus in the industrial segment, where RHI Magnesita is currently under-represented.

Significant network benefits and margin improvement potential have been identified through the addition of production capacity in important industrial locations in the south and west of India, where the group currently has no assets.

Under the terms of the Share Swap Agreement, RHI Magnesita India Ltd. will acquire all outstanding shares in DOCL in exchange for 27m new shares in RHI Magnesita India Ltd.

Based on the closing share price of RHI Magnesita India Ltd. on 18 November 2022 of INR 645.35 per share, the Consideration Shares had a value of approximately INR 17,424 m (USD 218m).

The group will consolidate DOCL's earnings and approximately EUR 54m of net debt held by DOCL through its majority shareholding in RHI Magnesita India Ltd., resulting in a marginal increase in gearing at Group level.

The acquisition is expected to be accretive to Group earnings per share. Following completion of the acquisition and the issuance of the Consideration Shares, the group's shareholding in RHI Magnesita India Ltd. will reduce from its current level of 70.2% to 60.1% and the Dalmia Bharat Group and minority shareholders in DBRL will hold a combined 14.4% stake in RHI Magnesita India Ltd.

The acquisition, which is conditional on the completion of the Business Transfer Agreement and Share Swap Agreement and other customary closing conditions, is expected to complete in 1Q23.
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Date Published: 23/11/2022

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