Vienna-based manufacturer of fireproof materials, RHI Magnesita, announces plans to acquire Resco Group, a US-based producer of alumina and refractories, for an enterprise value of up to $430 million. This strategic move aims to bolster RHI Magnesita’s presence in alumina-based refractories and enhance its product range for US customers. Refractories, known for their exceptional resistance to heat and wear, play a critical role in various industries.
Stefan Borgas, CEO of RHI Magnesita, emphasizes that the acquisition aligns with their ‘local for local’ production strategy, aiming to streamline supply chains, enhance responsiveness, and ensure a reliable supply of refractories for customers.
The cash consideration for the acquisition is estimated to be around $324 million, with potential additional payments reaching up to $342 million if the completion extends beyond 18 months from signing. RHI Magnesita plans to finance the acquisition through existing liquidity and a new committed facility of 200 million euros ($216 million).
Resco Group reported unaudited revenues of $252 million in 2023, with a profit before tax of $20 million. The acquisition is expected to yield synergies through the restructuring of the combined supply chain, a process anticipated to span approximately two years and incurring one-time costs of 60 million euros, including restructuring at non-US plants.
Subject to customary closing conditions and merger control authority approval, the acquisition is anticipated to be finalized in the second half of the year. Upon completion, the combined entity will operate 15 production sites across the United States, Canada, and Mexico, as per Resco’s statement.
Resco Group is currently owned by Balmoral Funds, a California-based private equity firm managing assets totaling approximately $1.5 billion.
