Vienna-headquartered fireproof materials manufacturer RHI Magnesita has announced its intention to purchase Resco Group, a U.S.-based alumina and refractories producer, for an enterprise value of up to $430 million, as confirmed by both companies. RHI Magnesita highlighted that the acquisition aims to bolster its presence in alumina-based refractories, enhancing the product offerings available to customers in the United States.
Refractories are materials known for their exceptional resistance to high temperatures and wear. CEO Stefan Borgas emphasized 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 clients. The cash consideration for the acquisition is estimated at around $324 million, with a potential upper limit of approximately $342 million if the completion extends beyond 18 months post-signing.
The acquisition will be financed using RHI Magnesita’s existing liquidity and a new committed facility of 200 million euros ($216 million). Resco reported unaudited revenues of $252 million in 2023, with a pre-tax profit of $20 million. The companies anticipate generating synergies through the restructuring of the combined supply chain over a two-year period, incurring one-time costs of 60 million euros, including restructuring activities at non-U.S. facilities.
The transaction is subject to customary closing conditions, including regulatory approvals, and is anticipated to be finalized in the latter half of this year. Upon completion, the combined entity will operate across 15 production sites spanning the United States, Canada, and Mexico, according to Resco’s statement. Resco is currently under the ownership of Balmoral Funds, a private equity firm based in California with assets under management totaling around $1.5 billion.