SKW Stahl-Metallurgie Holding AG / Mergers & Acquisitions/Capital Increase
29.10.2009
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Press release
Acquisition in Brazil expands world market leadership
- Majority acquisition of two-thirds of Tecnosulfur, the Brazilian market
leader for hot metal desulphurization
- Acquired annual revenues of around BRL 95 million (ca. EUR 35 mill.),
attractive EBITDA margin
- Closing scheduled for December 2009 or January 2010
- Equity portion of acquisition intended to be financed via capital
increase
Unterneukirchen (Germany), October 29, 2009. SKW Metallurgie, a specialty
chemicals Group listed in Germany's SDAX index, announced today in an ad
hoc release that it had signed the acquisition agreement for a two-thirds
interest in the non-listed Brazilian company Tecnosulfur S/A, headquartered
in Belo Horizonte.
Tecnosulfur is the market leader in the hot metal desulphurization sector
in Brazil. The acquisition will contribute to further increasing the SKW
Metallurgie Group's global market leadership in hot metal desulphurization.
The Tecnosulfur revenue totaled around BRL 95 million (ca. EUR 35 mill.) in
2008. As a result of its market and cost leadership in the by far largest
South American steel market, Tecnosulfur commands an above-average
profitability. Confidentiality about the purchase price was agreed. The
purchase price is based on an EBITDA multiple attractive for SKW
Metallurgie, and includes an earn-out component.
In order to finance the Tecnosulfur acquisition and to optimize the finance
structure of current BRIC countries investment projects already being
implemented, SKW Metallurgie intends to implement a capital increase to be
placed with existing shareholders.
'The acquisition of Tecnosulfur is not only a unique opportunity for SKW
Metallurgie to further increase its global market leadership for hot metal
desulphurization - it is also a further significant step in the SKW
Metallurgie Group's expansion into the fast-growing BRIC countries. At the
same time, we can offer a capital increase based on a concrete and
attractive growth project, which will create substantial added value for
our owners,' commented SKW Stahl-Metallurgie Holding AG's CEO Ines Kolmsee
on the transaction.
Global market leadership in hot metal desulphurization further increased
SKW Metallurgie has ranked among the world's leading groups for hot metal
desulphurization for several decades. The Group became the world's number
one company in this segment when it acquired the US company ESM in 2007. It
can now clearly increase this position by integrating Tecnosulfur. One of
the founding shareholders will continue to hold a one-third interest in the
Brazilian company, and will continue to play an active role in its
management. This will ensure a smooth continuation of the high standards in
production and client services as well as an efficient integration into the
SKW Metallurgie Group.
Consistent continuation of expansion strategy
For several years, SKW Metallurgie's growth strategy has primarily been
based on reducing the group's dependency on the traditional steel markets
in Europe and North America. The background to this philosophy is, in
particular, the fact that the percentage of global steel production being
accounted for by BRIC countries (Brazil, Russia, India and China) will
continue to increase, and, according to estimates by the Worldsteel
industry association, it will grow from 45.9% to more than 56.7% from 2008
to 2009 alone. SKW Metallurgie already has two facilities in China. The
Indian market is covered by a joint venture with two plants for hot metal
desulphurization products, and the calcium silicon and cored wire
production facility in Bhutan (politically stable kingdom, directly
bordering India) currently being constructed. SKW Metallurgie will also
supply its top-quality products to Russian steel manufacturers from its own
plant from 2010. As a result, entering the Brazilian market via the
majority acquisition of Tecnosulfur is the next logical step in SKW
Metallurgie's expansion strategy. The Brazilian economy is geared to a
significant recovery in 2010; in particular, the Brazilian steel market is
forecast to grow by around 9%. The assignment of the 2014 Soccer World Cup
and the Summer Olympics in 2016 to Brazil will provide additional impetus
to expanding infrastructure in Brazil - a key market for the steel
industry.
Significant opportunities on the booming Brazilian steel market
The letter of intent already concluded in mid-2008 with a ThyssenKrupp
group company for the ten-year supply of the new ThyssenKrupp steel plant
with carbide-based hot metal desulphurization products can be perfectly met
through Tecnosulfur. The acquisition means that SKW Metallurgie has
additional access to further steel producers in this region, and to a
long-term secure supply of raw materials via a ten-year agreement which
Tecnosulfur has recently concluded.
Operational growth meets forecast - guidance for 2011 confirmed
The recovery in steel production compared to the very weak first half of
2009 is having an increasingly positive impact on quantities in SKW
Metallurgie's operating business. In terms of margins, SKW Metallurgie's
earnings are still depressed by inventories of raw materials, for which
inventory prices are significantly higher than current market prices.
However, the Managing Board continues to believe that it will be able to
record positive operative EBITDA for 2009. Subject to a recovery in the
global economy, a significant increase in revenues and substantially
improved earnings are forecast for 2010. SKW Metallurgie's Managing Board
has confirmed its guidance of revenues of approx. EUR 360 million with an
operating EBITDA margin of approx. 9% for 2011.
First-time consolidation of Tecnosulfur expected for December 2009 or
January 2010
Tecnosulfur will be consolidated for the first time after the transaction
is closed - this is expected for December 2009 or January 2010. As a
result, Tecnosulfur will not make any significant contribution to the SKW
Metallurgie Group's income statement for 2009. However, the new subsidiary
will be included in consolidated figures for 2010 for almost the entire
year.
Contact:
SKW Stahl-Metallurgie Holding AG
Christian Schunck
Head of IR and Corporate Communications
FabrikstraÃe 6
84579 Unterneukirchen
Germany
Tel.: +49 8634-617596
Fax: +49 8634-617594
E-Mail: schunck@skw-steel.com
Internet: www.skw-steel.com
About SKW Stahl-Metallurgie Holding AG
SKW Metallurgie is the global market leader for chemical additives for hot
metal desulphurization, and for cored wire used in secondary metallurgy.
The Group's products enable steel-makers to efficiently manufacture
high-quality steel products. Clients include the world's leading companies
in the steel industry. The SKW Metallurgie Group has more than 50 years of
metallurgical know how, and currently operates in more than 40 countries.
What is more, the Group is a leading supplier of Quab specialty chemicals,
which are mainly used in the global production of industrial starch for the
paper industry. The company's operating business is broken down into the
two core segments 'Cored Wire and 'Powder and Granules', and the 'Other'
segment. The SKW Metallurgie Group is headquartered in Germany with
production facilities in France, the US (6), Canada, Mexico, South Korea,
the Peoples' Republic of China (2) and India (2 via joint ventures); the
acquisition of Tecnosulfur means that it has added a new production
facility in Brazil.
Shares of SKW Stahl-Metallurgie Holding AG have been listed in Frankfurt
Stock Exchange's Prime Standard since December 1, 2006 with ISIN
DE000SKWM013, and have been included in the SDAX index from June 23, 2008.
DISCLAIMER
This press release contains statements on future developments that are
based on currently available information and involve risks and
uncertainties that could cause the actual results to differ from these
forward-looking statements. These risks and uncertainties include, for
example, unpredictable changes in political and economic conditions,
particularly in the steel and paper industry, the competitive situation,
interest and currency risks, technological development as well as other
risks and unexpected circumstances. SKW Stahl-Metallurgie Holding AG and
its Group companies accept no obligation to update such forward-looking
statements.
SKW Stahl-Metallurgie Holding AG
Christian Schunck
Head of IR and Corporate Communications
FabrikstraÃe 6
84579 Unterneukirchen
Germany
Tel.: +49 8634-617596
Fax: +49 8634-617594
E-Mail: schunck@skw-steel.com
Internet: www.skw-steel.com
29.10.2009 |[![CDATA[|[a href="http://www.dgap.de"|]Financial News transmitted by DGAP|[/a|]]]|]
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Language: English
Company: SKW Stahl-Metallurgie Holding AG
Fabrikstrasse 6
84579 Unterneukirchen
Deutschland
Phone: +49 (0)8634 61 511
Fax: +49 (0)8634 61 513
E-mail: info@skw-steel.com
Internet: www.skw-steel.com
ISIN: DE000SKWM013
WKN: SKWM01
Indices: SDAX
Listed: Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr
in Berlin, München, Düsseldorf, Stuttgart, Hamburg
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DGAP-News: SKW Stahl-Metallurgie Holding AG: Acquisition in Brazil expands world market leadership
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