Completion of Resco transaction

RHI Magnesita announces the completion of its $410 million (c.€390 million) acquisition of Resco Group, a US based producer of alumina monolithics and wide range of basic and non-basic refractories, following merger control authority approval.

About Resco

Resco is a producer of shaped and unshaped refractories, including products for use in the petrochemical, cement, aluminium, and steel making industries. The Group will acquire six refractory plants and two raw material sites in the US and two plants in the UK and Canada. Resco's Rescobond and Rescocast brands are widely used in refining and petrochemical applications by global customers.

Benefits of the Acquisition

The Acquisition will deliver a broad range of benefits to customers, including a significantly enhanced product portfolio, supply security, improved responsiveness and sustainability benefits.

The Acquisition will increase RHI Magnesita's local production in the US and Canada by transferring significant volumes of production from non-US plants to the Resco production facilities in the US, and continues the Group's strategic growth trajectory in alumina-based refractories.

Synergies will be created in the mid-term following the restructuring of the combined supply chain, which is expected to last approximately two years and incur one-time costs of €60 million, including restructuring efforts in non-US plants. A write down of assets in Brazil of approximately €30 million connected to the completion of the Resco transaction is expected to be recognised in the 31 December 2024 results, reflecting the network optimisation which will result in transfer of production capacity into the US.

Synergies are expected to be generated through supply chain improvements, production network optimisation, working capital reduction, logistics efficiencies, supply integration, technology transfer, increased recycling opportunities and procurement savings.

Commenting on the Acquisition, Stefan Borgas, Chief Executive Officer of RHI Magnesita, said:

"The acquisition of Resco marks a significant milestone for RHI Magnesita as we continue to expand our offering in North America, responding to our customers' evolving priorities. This deal will deliver a step change for our North American business as we continue to enhance local-for-local production and expand our product offering. Resco is a profitable and cash flow generative business with a strong customer base in the petrochemical, cement, and aluminium industries that will immediately add value to RHI Magnesita.

Our new colleagues from Resco will join a collaborative international team and benefit from a wide range of skills, experience, and exceptional career development opportunities. Together, I am confident that we will continue to set new industry standards."

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