RHI Magnesita ahead of a major acquisition in the USA

Austro-Brazilian Refractories Company Re Magnecita It wants to expand its presence in the USA through a major acquisition. As the company announced on Monday, it will acquire the American Resco Group, a manufacturer of aluminum oxide stones and refractory materials. Resco operates seven plants, two raw material sites in the United States, and two operations in the United Kingdom and Canada. The company's value is $430 million.

It said in a statement that the reason for the acquisition is to increase domestic production in the United States. Currently, about 50 percent of U.S. sales are not produced in the country. Resco is currently owned by Balmoral Funds, a California-based private equity RIA with $1.5 billion in assets under management. Last year's sales were $252 million, pre-tax profits were $20 million, and total assets were $191 million.

Borjas: Supply chains should be shortened

RHI Chairman of the Board of Directors Stefan Borjas Commenting on the acquisition, he said: “The acquisition strengthens our ‘local for local’ production strategy and will shorten supply chains, improve our speed of response and increase the security of supply of refractory materials to our customers.”

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.