TIDMRHIM
RNS Number : 0362E
RHI Magnesita N.V.
27 June 2023
RHI Magnesita N.V.
RESPONSE TO PARTIAL OFFER
IMPORTANT INFORMATION
This Response Statement has been published by the unitary board
of directors (the "Board") of RHI Magnesita N.V. ("RHI Magnesita"
or the "Company") as required pursuant to article 20 and Annex G of
the Netherlands Decree on Public Takeover bids for the sole purpose
of providing information to its shareholders on the voluntary
partial cash offer made by Ignite Luxembourg Holdings S.à r.l. (the
"Offeror"), to holders of ordinary shares in the capital of the
Company (excluding shares held in treasury) (the "Shares") to
purchase 14,086,156 Shares (the "Offer Shares") (representing 29.9
per cent. of the Issued and Outstanding Share Capital of the
Company) at an offer price of GBP 28.50 per Share (the "Offer").
The Offeror is a wholly-owned subsidiary of a number of limited
partnerships which are indirectly managed by Rhône Holdings VI
L.L.C. ("Rhône").
In addition to the terms defined elsewhere in this Response
Statement, any capitalised terms in this Response Statement shall
have the meaning attributed to them in the Appendix (Definitions)
of this Response Statement.
This document does not constitute or form part of an offer to
buy or sell, or a solicitation of an offer to buy or sell, any
securities to any person in any jurisdiction, nor a solicitation of
any vote, consent or approval. Shareholders of the Company should
form their own view on the merits of the Offer and make their own
decision. This document is not for release, publication or
distribution in, into, or from Australia, Canada, Hong Kong, Japan,
New Zealand, South Africa or the United States (including its
territories and possessions) or any other jurisdiction where such
release, publication or distribution may result in a significant
risk of civil, regulatory or criminal exposure if information
concerning the Offer is sent or made available to persons in those
jurisdictions (the "Restricted Jurisdictions") and therefore
persons into whose possession this document comes should inform
themselves about, and observe, any such restrictions. Failure to
comply with any such restrictions may constitute a violation of the
securities laws of any Restricted Jurisdiction. If you are in any
doubt about the contents of this document or the action you should
take, you should seek your own legal, tax and/or financial advice
immediately from your stockbroker, bank manager, attorney,
accountant or other independent financial adviser or from an
appropriately authorised independent legal and/or financial adviser
under the laws of your own jurisdiction. This document may contain
quotes and excerpts from certain previously published third party
materials.
If you have sold, or otherwise transferred your shares, please
send this document as soon as possible to the purchaser or
transferee, or to the stockbroker, bank or other agent through whom
the sale of transfer was effected. However, this document must not
be forwarded or transmitted to any Restricted Person or into any
Restricted Jurisdiction. If you have sold or otherwise transferred
only a part of your shares, you should retain this document and
consult your stockbroker, bank or other agent through whom the sale
or transfer was effected.
The Board accepts responsibility for the information contained
in this Response Statement, provided that the only responsibility
that is accepted for information concerning the Offeror, Rhône
(including the affiliates owned and/or controlled by it) and the
Offer is the assurance that such information is properly reported
and reproduced from the Offer Document. This document includes
statements made as at the date of this Response Statement, unless
some other time is specified in relation to them, and publication
of this document shall not give rise to any implication that there
has been no change in the facts set out in this document since such
date. RHI Magnesita disclaims and does not undertake any obligation
to publicly update or revise any statement in this document to
reflect events or circumstances after the date of this document,
whether as a result of new information, future events or otherwise,
except as may be required by applicable securities laws or by any
appropriate regulatory authority. Nothing in this document is
intended to be a forecast, projection or estimate of the future
financial performance of RHI Magnesita and no statement in this
document should be interpreted to mean that the performance for the
current or future financial periods will necessarily be greater
than those for the relevant preceding financial period.
Certain gures included in this document have been subjected to
rounding adjustments. Accordingly, gures shown in the same category
presented in different tables may vary slightly and gures shown as
totals in certain tables may not be an arithmetic aggregation of
the gures that precede them.
Copies of this Response Statement are available at
https://ir.rhimagnesita.com/shareholder-information/partial-cash-offer/.
This Response Statement includes certain "forward-looking"
statements, including statements about the expected timing and
completion of the Offer. Forward-looking statements involve known
or unknown risk and uncertainty because these statements relate to
events and depend on circumstances that occur in the future.
Generally, words such as may, should, aim, will, expect, intend,
estimate, anticipate, believe, plan, seek, continue or similar
expressions identify forward-looking statements. The Company
believes the expectations reflected in such forward-looking
statements are based on reasonable assumptions. Nevertheless, no
assurance can be given that such statements will be fulfilled or
prove to be correct, and no representations are made as to the
future accuracy and completeness of such statements. Any such
forward-looking statements must be considered with the fact that
actual events or results may vary materially from such
forward-looking statements due to, among other things, political,
financial, economic, commercial or legal changes in the markets and
environments in which RHI Magnesita does business, to competitive
developments or risks inherent to the Company's business plans and
to uncertainties, risk and volatility in financial markets and
other factors affecting RHI Magnesita.
Shareholders are reminded that under Dutch law the Board owes
fiduciary duties to the Company and through the Company to all of
its stakeholders and not only to Shareholders. Decisions that the
boards may have to take pursuant to their fiduciary duties may
adversely affect Shareholder value.
This document summarises certain provisions of the Offer
Document. However, reading this document is not a substitute for
reading the Offer Document in full and Shareholders should read the
Offer Document carefully in its entirety before deciding whether to
take any action in respect of the Offer.
This Response Statement is governed by the laws of the
Netherlands. The District Court of Amsterdam (Rechtbank Amsterdam)
and its appellate courts shall have exclusive jurisdiction to
settle any disputes which might arise out of or in connection with
this Response Statement. Accordingly, any legal action or
proceedings arising out of or in connection with this Response
Statement may be brought exclusively in such courts. The Offer, as
well as the agreements entered into between the Offeror and the
Shareholders as a result of the Offer, shall be governed by and
construed in accordance with the laws of England and Wales. Any
dispute regarding the Offer, or which arises in connection
therewith, shall be exclusively settled by the courts of England
and Wales.
RHI MAGNESITA N.V.
(registered in the Netherlands with company number 68991665
)
RESPONSE TO THE PARTIAL CASH OFFER
by
Ignite Luxembourg Holdings S.à r.l.
for
14,086,156 shares, representing 29.9 per cent. of the Issued and
Outstanding Share Capital
of the Company
Shareholders should carefully read the whole of this document
(including any information incorporated into this document by
reference to another source). In particular, your attention is
drawn to the letter from the Non-Executive Chairman which is set
out below.
The Company is a public limited liability company incorporated
under Dutch law, with its registered seat in Arnhem, the
Netherlands. Therefore, the UK City Code on Takeovers and Mergers
does not apply to the Offer and the Offer is not subject to the
jurisdiction of, or being regulated by, the UK Panel on Takeovers
and Mergers, and only section 27c of the Austrian Takeover Act
("ATA") is relevant to the Company. As the Offer is a voluntary
public partial offer, pursuant to section 27c para 1 ATA, section
27c para 2 ATA does not apply to it and the Offer is not subject to
the jurisdiction of, or being regulated by, the Austrian Takeover
Commission. The shares in the Company , in the form of
dematerialised depositary interests representing entitlements in
the shares, are admitted to trading on the London Stock Exchange
and the Vienna Stock Exchange (Wiener Börse).
Barclays Bank PLC, acting through its Investment Bank
("Barclays"), which is authorised by the PRA and regulated in the
United Kingdom by the FCA and the PRA, is acting exclusively for
RHI Magnesita and no one else in connection with the Offer and will
not be responsible to any person other than RHI Magnesita for
providing the protections afforded to the clients of Barclays nor
for providing advice in relation to the Offer or any other matters
referred to in this document.
Peel Hunt, which is authorised and regulated in the United
Kingdom by the FCA, is acting exclusively as financial adviser and
corporate broker to RHI Magnesita and for no one else in connection
with the matters referred to in this document and will not be
responsible to any person other than RHI Magnesita for providing
the protections afforded to clients of Peel Hunt, nor for providing
advice in relation to the matters referred to herein. Neither Peel
Hunt nor any of its affiliates owes or accepts any duty, liability
or responsibility whatsoever (whether direct or indirect, whether
in contract, in tort, under statute or otherwise) to any person who
is not a client of Peel Hunt in connection with the matters
referred to in this document, or otherwise.
The date of publication of this document is 27 June 2023. All
references to time in this document are references to Central
European Time unless otherwise stated.
Letter from the Non-Executive Chairman of RHI Magnesita N.V.
(registered in the Netherlands with registered number
68991665)
Registered office Kranichberggasse 6, 1120 Vienna, Austria
Directors:
Herbert Cordt (Non-Executive Chairman) Janice "Jann" Brown (Non-Executive Director)
John Ramsay (Non-Executive Deputy Chairman, Senior Karl Sevelda (Non-Executive Director)
Independent Director)
Stefan Borgas (Chief Executive Officer) Marie-Hélène Ametsreiter (Non-Executive
Director)
Ian Botha (Chief Financial Officer) Wolfgang Ruttenstorfer (Non-Executive Director)
Janet Ashdown (Non-Executive Director) Karin Garcia (Employee Representative Director)
David Schlaff (Non-Executive Director) Martin Kowatsch (Employee Representative Director)
Stanislaus Prinz zu Sayn-Wittgenstein-Berleburg Michael Schwarz (Employee Representative Director)
(Non-Executive Director)
27 June 2023
Dear Shareholder
Response of the Board to the Partial Cash Offer by Ignite
Luxembourg Holdings S.à r.l. for 14,086,156 Shares, representing
29.9 per cent. of the Issued and Outstanding Share Capital of the
Company
Terms of the Offer
On 30 May 2023, the Offeror announced its intention to make a
voluntary partial cash offer to acquire 9,403,539 Shares,
representing 20 per cent. of the Issued and Outstanding Share
Capital of the Company (excluding treasury shares) at a price of
GBP 28.50 for each Share (the "Offer Price"). The Offeror is a
wholly-owned subsidiary of a number of limited partnerships which
are indirectly managed by Rh ône. The Offer does not relate to the
acquisition of Shares held by the Company in treasury.
The Offer Document was published on 19 June 2023 detailing the
Offeror's voluntary partial cash offer, and increasing the number
of Shares the Offeror is seeking to acquire to up to 14,086,156
Shares (corresponding to 29.9% of the entire Issued and Outstanding
Share Capital of the Company). The Offer Document states that the
Offer Price will not be reduced in respect of the dividend of EUR
1.10 per Share declared by the Company on 24 May 2023 for the
financial year ended 31 December 2022 (the "Declared Dividend").
The record date for the Declared Dividend was 9 June 2023 and the
Declared Dividend is due to be paid by the Company on 6 July 2023.
Should the Company, prior to the settlement of the Offer, announce,
declare, make, pay or distribute dividends or any other
distribution or transfer or return of value to its Shareholders
other than the Declared Dividend, the Offeror has reserved the
right to make an equivalent deduction to the consideration payable
for the Shares in the Offer.
The Offer Price values RHI Magnesita's Issued and Outstanding
Share Capital as at the date of this Response Statement at
approximately GBP 1,340.0 million, or EUR 1,561.2 million at the
Response Document Exchange Rate.
In case the total amount of Tendered Shares together with any
Shares (the "Additional Shares") acquired by or on behalf of the
Offeror outside of the Offer exceeds the amount of Offer Shares
(i.e. 14,086,156, representing 29.9 per cent. of the Issued and
Outstanding Share Capital as at the date of the Offer Document),
all duly submitted acceptances will be scaled down pro rata to such
number of Shares as shall not exceed the amount of Offer Shares
less the Additional Shares. The total amount of Shares acquired by
the Offeror under the Offer, together with any Additional Shares,
shall not exceed 29.9 per cent. of the Company's Issued and
Outstanding Share Capital.
The acceptance period commenced on 19 June 2023 and is expected
to expire at 1:00pm London time on 10 July 2023. Acceptances of the
Offer are irrevocable and cannot be withdrawn (including, without
limitation, in the case of a Competing Offer or if the Offer is
revised in accordance with the Offer Document or extended).
The Offeror has stated that, if the Offer is successful, the
Offeror will seek appropriate representation in the board of
directors of the Company. However, this is not a condition to
completion of the Offer. No relationship agreement or any other
governance arrangement has been agreed between the Offeror and the
Company.
The Offer is conditional upon the conditions set out in section
4 of the Offer Document, including the receipt of approvals (or
confirmation they do not have jurisdiction) from competition
authorities in Austria, Germany, India and Mexico and the foreign
investment authorities in Austria, France, Germany, Italy, Spain
and the United Kingdom and such other competition or foreign
investment authorities with respect to which the Offeror determines
that the consent, approval, clearance, confirmation or licence
thereof is required or advisable for the formation and funding of
the Offeror or any other acquisition vehicle, or completion of the
Offer under applicable competition or foreign investment laws (the
"Competition and FDI Approvals"). If such conditions are not
satisfied, or waived by the Offeror, the Offer may be
withdrawn.
The Company's current trading and nancial position
As the Company announced on 15 June 2023, the momentum of
improving pro tability and margins delivered in Q1 2023 continued
in April and May, as refractory pricing was largely maintained
against a background of reducing costs.
Refractory sales volumes in the five months ended 31 May 2023
(the "Period") excluding M&A were 7.0 per cent. lower year on
year, in line with overall market demand. Steel, cement and glass
demand outside of India remains soft due to a slowdown in
construction activity, with some glass project postponements now
evident. Demand in the non-ferrous metals segment continues to be
resilient. As anticipated, due to the subdued demand backdrop and
reducing input costs, the Group is beginning to experience sales
price de ation in a number of its markets which is expected to
continue, and possibly accelerate, through the remainder of the
year.
Refractory EBITA margin contribution for the Period, which
excludes vertical integration bene ts, was better than expected,
supported by cost de ation in April and May, as the cost of freight
and purchased raw material reduced, partially o set by weaker xed
cost absorption due to lower production volumes.
The continued lower pricing environment for magnesite-based raw
materials means that the Group's vertical integration EBITA margin
contribution remains subdued and in line with the 1.8 per cent. of
Group margin delivered in the second half of 2022.
As a result, the overall adjusted EBITA margin for the Period
was 12.1 per cent. (2022: 11.6 per cent.), delivering unaudited
adjusted EBITA of EUR 174 million (2022: EUR 155 million).
Net debt to EBITDA remains at a similar level to the 2.1x
reported at 31 March 2023, including a 12 month historic
contribution from businesses acquired during the period.
Absolute net debt at 31 May 2023 was largely unchanged from 31
December 2022, supported by strong operating cashflow. The Group
continues to retain significant liquidity of EUR 1.2 billion.
Net working capital (before consolidation of M&A) was down
slightly from its 31 December 2022 level, as reductions in
inventory and accounts receivable were largely offset by lower
accounts payable. The Group continues to prioritise security of
supply for its customers in order to support recent market share
gains.
Total capital expenditure in the five months to 31 May 2023 was
EUR 42 million, out of overall guidance of EUR 200 million for
2023, with spending weighted towards the second half.
M&A increased net debt by EUR 268 million in the first five
months of the year, which was partially offset by the Qualified
Institutional Placement ("QIP") by RHI Magnesita India Ltd, which
raised approximately EUR 101 million in April 2023. The QIP is to
be followed by an equity investment of EUR 22 million by the Group
in RHI Magnesita India Ltd via a preferential issue, which is
expected to complete in June 2023. In the second half of the year,
the previously announced acquisition of the European, Indian, and
US-based operations of Seven Refractories for cash consideration of
EUR 95 million is expected to be completed.
The outlook for the Group's key end markets, and consequently
customer volumes, remains uncertain, with the order book currently
suggesting only a moderate volume increase in H2, if at all,
resulting in ongoing under-absorption of fixed costs. Pricing
pressure is expected to continue and possibly accelerate through
the remainder of the year.
Supported by the stronger than expected performance in the first
five months of the year, the Board now expects a modest
outperformance on its earlier 2023 EBITA and EBITA margin
guidance.
Leverage, measured as a ratio of net debt to EBITDA, is expected
to remain above 2.0x as the Group further executes on its M&A
pipeline.
The Board's financial assessment of the Offer
The Board has reviewed a number of different reference points
and applied a number of different valuation methodologies to
underpin its financial assessment on the Offer (each of which is
considered further below), including, amongst other things:
(i) historical share price analysis;
(ii) equity research analyst price targets;
(iii) discounted cash flow analysis; and
(iv) selected comparable company analysis.
The Board did not attribute any particular weight to any single
analysis or factor considered by it but rather made qualitative
judgments as to the significance and relevance of each analysis and
factor relative to all other analyses and factors performed and
considered by it and in the context of the circumstances of the
Offer.
(i) Historical share price analysis
The Board analysed the historical trading prices of the
Company's shares between 26 May 2018 and 26 May 2023, being the
last Trading Day prior to the announcement of the Offer. During
this period, the Company's average closing share price was GBP
33.70. The Board notes that the Offer Price of GBP 28.50 is below
this five-year average share price (representing a 15.4 per cent.
discount).
The Board notes that the Offer Price represents a premium of
approximately 24.0 per cent. and 20.5 per cent. to the
volume-weighted average trading prices of GBP 22.99 and GBP 23.65
during the last three months and six months prior to the
announcement of the Offer.
(ii) Equity research analyst price targets
The Board also reviewed the price targets for the Company's
shares published by seven equity research analysts as at 26 May
2023. The Offer Price is lower than the average target price of GBP
30.73 (representing a 7.3 per cent. discount) and the majority of
equity research analysts (five out of seven) published a price
target for the Company above the Offer Price.
(iii) Discounted cash flow analysis
In order to assess the fundamental, intrinsic value of the
Company's shares, the Board performed a discounted cash flow
analysis by calculating the present value of the Company 's
projected future cash flows based on Management's projections in
their business plan and certain assumptions on the weighted cost of
capital and perpetual growth rate. The discounted cash flow
analysis produced a range of prices that were higher than the Offer
Price.
As part of the Board's view on the fundamental value of the
Offer, the Board has taken into account the future prospects of the
business and delivery on its own strategy. The Board believes that
the expectations reflected in the discounted cash flow analysis are
based on reasonable assumptions. Nevertheless, no assurance can be
given and no representations are made as to the accuracy and
completeness of such analysis. Any forward-looking analysis must be
considered with the fact that actual events or results may vary
materially from such forward-looking statements due to, among other
things, risks in executing the strategy, political, financial,
economic, commercial or legal changes in the markets and
environments in which RHI Magnesita does business, to competitive
developments or risks inherent to the Company's business plans and
to uncertainties, risk and volatility in financial markets and
other factors affecting RHI Magnesita.
(iv) Selected comparable company analysis
The Board analysed the historical and current trading multiples
(including, amongst other things, the current enterprise value
compared to the estimated projected earnings before interest, tax
and amortisation for the year ending 31 December 2023) of the
Company as well as selected comparable listed companies and applied
them to Management's projections to calculate a range of implied
prices for the Company's shares, all of which were higher than the
Offer Price.
The Board, having been so advised by Barclays and Peel Hunt on
the financial terms of the offer, is of the view that the Offer
undervalues the Company. In providing their financial advice to the
Board, Barclays and Peel Hunt have taken into account the
commercial assessments of the Board.
However, the Board recognises that the premium may be attractive
to individual Shareholders who should form their own view
independently with respect to the value of the Offer, taking into
account their own individual investment considerations, their
investment time horizons and the liquidity that may be provided by
the Offer.
Regulatory status of the Offer
The Offer is not subject to the jurisdiction of, or being
regulated by, the UK Panel on Takeovers and Mergers, the Austrian
Takeover Commission or the Netherlands Decree on Public Takeover
bids (save pursuant to article 20 and Annex G of the Netherlands
Authority for the Financial Markets). As a result, the protections
that are afforded to offeree company shareholders in relation to
offers regulated by those authorities are not applicable to the
Offer. If the Offeror were to make a general offer or mandatory
offer for the Company in the future, such an offer would be
regulated by the ATA.
Implications for control of the Company
The current free float (as defined in the Appendix) of the
Company amounts to approximately 55.5 per cent., and approximately
11.8 per cent. of the Company's share capital is held by two
institutional investment organisations. If the Offer is successful,
the Offeror will hold at least 20 per cent. of the Company and,
depending on which Shareholders tender their shares into the Offer,
the free float could decrease to approximately 35.5 per cent. If
the Offeror were to acquire 29.9 per cent. of the Company's shares,
the free float could further decrease to approximately 25.6 per
cent.
As a consequence of this, the level of control that the
Shareholders who form part of the free float currently have will be
reduced, and they may have limited ability to influence the affairs
of the Company by exercise of their voting rights. The Offeror and
the Company's largest Shareholders may be able to exercise majority
control over the Company on any individual matter. The Offer
Document states that, if the Offer is successful, the Offeror will
seek to achieve appropriate representation in the Board. The Board
has not made any determination at this stage as to whether the
Offeror will be granted any representation on the Board.
If the Offer is successful, it will be challenging for any
potential bidder to successfully complete a full takeover of the
Company in circumstances where the free float is between 36 per
cent. and 26 per cent. and the existing major shareholders do not
support the takeover offer, which means that minority shareholders
are unlikely to have the opportunity to realise a control premium
for their investment.
The reduction in the free float of the Company could also
potentially translate into lower liquidity levels and reduction in
daily trading volumes, which in turn could make it more difficult
for new shareholders to invest in the Company and/or existing
Shareholders to realise their investments in the Company. However,
Shareholders should also take into account that, as is discussed
further below, daily trading volumes in the Company's shares are
already relatively low (average daily trading volume in the
Company's shares for the three months ended 26 May 2023 was 47,198
shares which equates to approximately 0.1 per cent. of the total
number of the Issued Share Capital), and the Offer therefore
represents a significant liquidity opportunity for Shareholders who
are seeking to monetise their investment in the Company.
The Offeror has noted in the Offer Document that if the Offer is
successful there is a risk that the Company may no longer meet the
eligibility requirements for inclusion in the FTSE 250 Index.
Features of the Offer and associated factors
In addition to the above, the Board would like to draw
Shareholders' attention to the following when considering whether
to accept the Offer:
1. Premium over pre-announcement and recent share price
performance - The Offer Price is at a c.39.0 per cent. premium to
the closing price of the Company's shares of GBP 20.50 on 26 May,
the last Trading Day prior to the announcement of the Offer.
Similarly, in comparison to the volume weighted average share price
for the last one, three, six and 12 months prior to the
announcement of the Offer, the premium implied by the Offer amounts
to 30.4 per cent., 24.0 per cent., 20.5 per cent. and 34.6 per
cent. respectively. Shareholders who accept the Offer may be able
to realise their investment in the Company at a premium to the
pre-announcement share price and recent share price
performance.
2. Liquidity event for Shareholders - The average daily trading
volume in the Company's shares for the three months ended 26 May
2023 is 47,198 shares. The number of Offer Shares equates to the
aggregate trading volumes over a period of approximately 298 days.
As such, the Offer represents a significant liquidity opportunity
for Shareholders who are seeking to monetise their investment in
the Company. This is especially relevant for Shareholders with
larger shareholdings as any exit would need to be executed over an
extended period of time, alongside the possibility of negative
impact on the share price.
3. Rh ôn e has an established track record of investment in and
supporting the strategy of the Company - Rhône had been a long-term
investor in Magnesita Refratários S.A. ("Magnesita") (since its
acquisition of LWB Refractories in 2007, which became part of the
Magnesita group in 2008) and exited its investment in 2018
following the formation of the RHI Magnesita group of companies in
2017. During its tenure as a shareholder, Rhône was supportive of
the management of Magnesita and its overall strategy. It
understands the operations and key stakeholders of the business
and, as the holder of a strategic minority stake, Rh ô ne will have
the opportunity to contribute its industry expertise and work
alongside Management to deliver the next chapter of growth and
value creation for the Company and its shareholders. Rhône has
confirmed to the Board that it is supportive of the strategy to
provide total heat management solutions with raw material backward
integration and to grow through consolidation in the refractory
industry with a focus on technology and sustainability
leadership.
4. Benefits of organic and inorganic growth initiatives not
fully realised and reflected in current share price - The Company
has relatively higher levels of financial leverage today compared
to historical levels and comparable listed companies. This is the
result of the structural build-up of inventories to better serve
customers and both organic and inorganic growth initiatives through
greater investment in the business and M&A activity. The
benefits of these investments and acquisitions (including
synergies) have yet to be fully realised, and the Board believes
that these are not fully reflected in the current share price.
Shareholders who accept the Offer may not benefit fully from the
delivery of these benefits beyond the value of the Offer
premium.
5. No certainty as to when the Offer will complete - The Offer
Document states that the acceptance period of the Offer is expected
to expire at 1:00pm London Time on 10 July 2023 and that, subject
to the conditions precedent being satisfied (or waived by the
Offeror) by no later than 30 September 2023, settlement is expected
to begin by no later than 13 October 2023. However, the Offeror has
reserved the right to extend the acceptance period for the Offer to
no later than the date falling one week after the Competition and
FDI Approvals are satisfied (or waived by the Offeror). The Offer
is not subject to any longstop date mechanism. Accordingly, there
can be no certainty as to when the Offer will complete and
Shareholders who do accept the Offer will have to wait until
completion of the Offer until they receive the consideration due
under the Offer (and during that time, as discussed further in
paragraph 10 below, Shareholders who have accepted the Offer will
not have the right to withdraw their acceptances under any
circumstances). Should the Company, prior to the settlement of the
Offer, announce, declare, make, pay or distribute dividends or any
other distribution or transfer or return of value to its
shareholders other than the Declared Dividend, the Offeror has
reserved the right to make an equivalent deduction to the
consideration payable for the Shares in the Offer.
6. Offer conditional on the Offeror acquiring 20 per cent. - The
Offer is conditional on the Offeror receiving valid acceptances to
such an extent that the Offeror will become the owner of Shares
representing at least 20 per cent. of the Issued and Outstanding
Share Capital of the Company. In the event that the Offeror does
not receive sufficient acceptances, it will have the right to
invoke the condition and withdraw the Offer.
7. The Offer is subject to a number of other significant
conditions - The Offer is conditional on the conditions referred to
in the Offer Document. In addition to the acceptance condition (see
paragraph 6 above), the Offer is conditional on, amongst other
things:
7.1 competition authorities in Austria, Germany, India and
Mexico and the foreign investment authorities in Austria, France,
Germany, Italy, Spain and the United Kingdom and any other
competition or foreign investment authorities which the Offeror has
determined are required or advisable for the formation and funding
of the Offeror or any other acquisition vehicle, or completion of
the Offer, having given their approval to the transaction or having
confirmed that the transaction does not fall within the
jurisdiction of the relevant authority;
7.2 general conditions that, amongst other things, there has
been no material adverse effect on the Group or the business since
the Accounts Date and no member of the Group having purchased or
redeemed any of its own securities, reduced its share capital or
transferred or sold Shares out of treasury;
7.3 general conditions that, since the Announcement Date, there
has been no material adverse change in the financial markets or
conditions in Austria, the United Kingdom, the Netherlands or
internationally; outbreak or escalation of hostilities or
suspension or material limitations of trading on the London Stock
Exchange or the Vienna Stock Exchange (Wiener Börse) or any
over-the-counter market;
7.4 no decrease as at the close of trading of more than 10 per cent.:
(a) in the market price for the Shares on the London Stock
Exchange or in the general level of market prices for equity
securities in the FTSE 250 Index (measured from the close of
trading on 26 May 2023); or
(b) in the market price for the Shares on the Vienna Stock
Exchange or in the general level of market prices for equity
securities in the ATX Prime Index, measured from the close of
trading on 29 May 2023,
in each case, which subsists compared to the relevant closing
price for the Shares or general level of market prices for equity
securities in the FTSE 250 Index or ATX Prime Index (as applicable)
on three consecutive trading days;
7.5 no third party, such as a governmental entity or employee
representative body, having taken or having given notice to take
any action which would or might reasonably be expected to prohibit
or hinder or delay the Offer.
Shareholders should note that there can be no certainty that the
conditions will be satisfied or waived. Therefore, even if they
accept the Offer, there is no certainty that they will receive any
cash consideration.
8. Ability of the Offeror to scale down acceptances - The
Offeror is not obliged to accept any Tendered Shares to the extent
that it would result in the Offeror holding more than the total
number of Offer Shares. Therefore, if acceptance by the Offeror of
all Shares validly tendered would result in the Offeror holding
more Shares than the number of Offer Shares, the total number of
Tendered Shares will be scaled down pro rata (with the effect that
the total number of Shares held by the Offeror upon declaring the
Offer unconditional shall be equal to the number of Offer
Shares).
9. Ability of the Offeror to acquire Shares outside of the Offer
- The Offeror is not restricted under the Offer Document from
acquiring additional Shares outside the Offer and, as a consequence
of the Offer not being subject to the pricing provisions of the
ATA, there are no restrictions on the minimum price that the
Offeror must pay to Shareholders for Shares acquired outside of the
Offer, nor any requirement to increase the Offer Price if Shares
are purchased outside the Offer for a price above the Offer Price.
The Offer Document contains a statement that the Offeror did not
hold any securities in the Company as at the date of the Offer
Document and that none of the Offeror's management, any entities
controlled by the Offeror, any entities that control the Offeror or
any of their affiliated persons hold securities in the Company.
10. Acceptance of the Offer will be irrevocable, including in
the event of a Revised Offer - The Offer Document states that any
acceptances of the Offer will be irrevocable. Shareholders should
note therefore that, if they accept the Offer during the acceptance
period, they will be unable to sell their Tendered Shares or accept
another offer in respect of their Tendered Shares, including a
higher Competing Offer, if one were to be made. The Offeror has
reserved the right to revise the Offer as may be necessary or
desirable to give effect to any purported acceptance of the Offer
and Shareholders who have accepted the Offer prior to the date of
any revision will be bound by such revision, provided that it
represents, as determined by the Offeror, an improvement (or no
diminution) in the value of the Offer compared with the
consideration or terms previously offered or in the overall value
received and/or retained by a Shareholder (under the Offer or
otherwise).
11. The Offer is not available to all Shareholders - The Offer
Document states that the communication of the Offer Document, and
any other documents or materials relating to the Offer, is only
being made to (i) persons who are outside the United Kingdom; (ii)
investment professionals (as defined in Article 19(5) of the
Financial Services and Markets Act 2000 (Financial Promotion) Order
2005 (the "Financial Promotion Order")) or (iii) high net worth
entities and other persons to whom it may lawfully be communicated,
falling with Article 49(2)(a) to (d) of the Financial Promotion
Order (all such persons together being referred to as "relevant
persons"). Any investment activity to which the Offer Document
relates will only be available to, and will only be engaged in,
with relevant persons. Any person who is not a relevant person
cannot act or rely on the Offer Document or any of its contents. In
order to be eligible to view the Offer Document or make a decision
with respect to the Offer, Shareholders must be outside the
Restricted Jurisdictions and must not be a Restricted Person.
12. Jurisdiction for disputes - any dispute regarding the Offer,
or which arises in connection therewith, shall be exclusively
settled by the courts of England and Wales, provided that under the
Offer Document, the Offeror and the Receiving Agent (as defined in
the Offer Document) have reserved the right to, and may in their
absolute discretion, bring proceedings in the courts of any other
country which may have jurisdiction.
13. As at the date of this Response Statement, the Shareholders
in the Company, who are defined as Insiders within the definition
of 'free float' in the Appendix, have not publicly stated their
views on the Offer.
Conclusion
The Board, having been so advised by Barclays and Peel Hunt on
the financial terms of the offer, is of the view that the Offer
undervalues the Company. In providing their financial advice to the
Board, Barclays and Peel Hunt have taken into account the
commercial assessments of the Board.
The Board believes that the benefits of organic and inorganic
growth initiatives have not yet been fully realised or reflected in
the share price. In addition, the Board notes that the Offer Price
is lower than the average target price of equity research analysts
of GBP 30.73 (representing a 7.3 per cent. discount) and the
majority of equity research analysts (five out of seven) published
a price target for the Company above the Offer Price.
The Offer is also subject to a number of significant conditions
and there can be no certainty as to whether and, if it does, when
the Offer will complete. Shareholders who accept the Offer will be
unable to trade their Shares until the Offer is withdrawn or
completes.
However, the Board notes that the Offer represents a premium
over the pre-announcement share price and provides the possibility
of a significant liquidity opportunity for Shareholders who are
looking to monetise their investment given that the number of Offer
Shares equates to the aggregate trading volumes over a period of
approximately 298 days.
Taking into account the considerations set out above, the Board
advises Shareholders to decide whether nor not to tender their
Shares depending on their own individual investment considerations
and their own individual circumstances.
The Board's views on the effect of the implementation of the
Offer on the Company 's interests, employees and locations
In addition to the matters set out above, article 20 and Annex G
of the Netherlands Decree on Public Takeover bids requires the
Board to give their views on certain matters, including the effect
of the Offer on employment, the employment conditions and the
locations of RHI Magnesita's places of business. In ful lling these
obligations under article 20 and Annex G of the Netherlands Decree
on Public Takeover bids, the Board can only comment on the details
provided in the Offer Announcement and the Offer Document.
The Board does not expect the Offer to have any negative impact
on employment, employment conditions and the locations of RHI
Magnesita's places of business. As mentioned above (see paragraph
3), Rh ô ne was a long-term investor in Magnesita in the past and
during its tenure as a shareholder, Rh ô ne was supportive of
Magnesita's management and their overall strategy.
Yours faithfully
Herbert Cordt
Non-Executive Chairman
RHI Magnesita N.V.
Additional Information
1 DIRECTORS AND INFORMATION ON THE Company
1.1 The directors of RHI Magnesita and their respective positions are:
Herbert Cordt (Non-Executive Chairman) Janice "Jann" Brown (Non-Executive Director)
John Ramsay (Non-Executive Deputy Chairman, Senior Karl Sevelda (Non-Executive Director)
Independent Director)
Stefan Borgas (Chief Executive Officer) Marie-Hélène Ametsreiter (Non-Executive
Director)
Ian Botha (Chief Financial Officer) Wolfgang Ruttenstorfer (Non-Executive Director)
Janet Ashdown (Non-Executive Director) Karin Garcia (Employee Representative Director)
David Schlaff (Non-Executive Director) Martin Kowatsch (Employee Representative Director)
Stanislaus Prinz zu Sayn-Wittgenstein-Berleburg Michael Schwarz (Employee Representative Director)
(Non-Executive Director)
1.2 RHI Magnesita is registered in the Netherlands with registered number 68991665.
1.3 RHI Magnesita maintains a premium listing on the Official
list of the London Stock Exchange (symbol: RHI Magnesita) and is a
constituent of the FTSE 250 index, with a secondary listing on the
prime segment of the Vienna Stock Exchange (Wiener Börse).
1.4 The registered of ce of RHI Magnesita is Kranichberggasse 6, 1120 Vienna, Austria.
1.5 The relevant business address of each of the Directors is
Kranichberggasse 6, 1120 Vienna, Austria.
2 INFORMATION ON SHARES HELD BY THE MEMBERS OF THE BOARD
Set out below are overviews of all transactions and agreements
concluded in relation to securities of RHI Magnesita by the members
of the Board, their spouses and/or registered partners, their
minors and any legal entities in which they and/or these persons
have control, in the year prior to the public statement announcing
the Offer (i.e. 30 May 2022 up to 30 May 2023).
Name Type of Date Number of Price
transaction securities per
share
Stefan Borgas Award of 06-Mar-23 76,929 GBP26.24
the options
LTIP 2023
----------------------- --------------------- ---------------------- --------------------
Stefan Borgas Exercise of 30-May-23 50,042 GBP20.50
the ordinary
LTIP 2020 shares
options
----------------------- --------------------- ---------------------- --------------------
Ian Botha Award of 06-Mar-23 33,728 GBP26.24
the options
LTIP 2023
----------------------- --------------------- ---------------------- --------------------
Ian Botha Exercise of 30-May-23 21,947 GBP20.50
the ordinary
LTIP 2020 shares
options
----------------------- --------------------- ---------------------- --------------------
Vesting of
2019 18,676
Conditional ordinary
Ian Botha Award 28-Nov-22 shares GBP22.50
----------------------- --------------------- ---------------------- --------------------
John Ramsay Purchase 04-Nov-22 2,760 GBP19.65
ordinary
shares
----------------------- --------------------- ---------------------- --------------------
PCA of Stanislaus Off market 06-Nov-22 1,071,722 Nil
Prinz zu gift ordinary
Sayn-Wittgenstein-Berleburg, shares
Elisabeth
Prinzessin
zu
Sayn-Wittgenstein-Berleburg
----------------------- --------------------- ---------------------- --------------------
3 FINANCIAL INFORMATION
The information in accordance with Annex G paragraph 2 of the
Netherlands Decree on Public Takeover bids is contained in the
adopted and approved annual report of RHI Magnesita for the
financial year 2022 as well as the announcement of RHI Magnesita's
trading update as published on 15 June 2023 (copies can be obtained
from ir.rhimagnesita.com/). The trading update published on 15 June
2023 is incorporated by reference in this Response Statement.
Appendix
Definitions
The following de nitions apply throughout this document unless
the context requires otherwise:
"Accounts Date" 31 December 2022.
"Additional Shares" has the meaning given in the section titled "Terms of the Offer" above.
"Announcement Date" 30 May 2023.
"Board" means the unitary board of directors of the Company.
"Competing Offer" means a public offer for all or any number of the Shares of the Company announced or
launched
by a third party on or after the publication of the Offer Document on 19 June 2023.
"Competition and FDI has the meaning given in the section titled "Letter from the Non-Executive Chairman of RHI
Approvals" Magnesita N.V." above.
"Declared Dividend" means the dividend of EUR 1.10 per Share declared by the Company on 24 May 2023 for the
financial
year ended 31 December 2022.
"Directors" means the directors of the Company from time to time.
"EBITA" means earnings before interest, taxes, and amortisation.
"FCA" means the Financial Conduct Authority in its capacity as the competent authority for the
purposes
of Part VI of the Financial Services and Markets Act 2000.
"free float" means the shares of the Company that are not restricted and are available to the public for
trading in the secondary market (see table below for reference)
Shareholder type Number Total % of
of shares issued and outstanding
capital
Insiders (including
MSP Stiftung, Chestnut,
FEWI, Silver*) 20,473,276 43.46%
---------- -----------------------
Directors** 473,128 1.00%
---------- -----------------------
Free float 26,164,486 55.54%
---------- -----------------------
Total issued and
outstanding capital 47,110,890 100.00%
Sources: AFM
* Insider holdings include MSP Stiftung
and wholly owned subsidiaries, Chestnut
Beteiligungsgesellschaft, Silver Beteiligungsgesellschaft
and FEWI Beteiligungsgesellschaft.
**Includes PCAs of directors, unless
these are included in the insider holdings.
In providing the table of shareholdings
above, the Company has included the
number of shares registered at the AFM
on 26 June 2023, or, where the Company
has been made aware of more up-to-date
information through a direct notification
by the shareholder, it has used this
information. These stated interests
may differ from the current interests
of the relevant shareholders as these
interests are based on the number of
shares owned at the time of the notification
and are not adjusted for any purchases
or sales since that date.
The total % of issued share capital
in the table is calculated excluding
treasury shares held by the Company
"Group" means the Company and its subsidiaries.
"Issued and Outstanding means at any time, the Issued Share Capital less the Treasury Shares.
Share Capital"
"Issued Share Capital" means, at any time, the issued share capital of the Company.
"Magnesita" means Magnesita Refratários S.A., a corporation incorporated under the laws of Brazil
having its registered office at Praça Louis Ensch, 240, Cidade Industrial, Contagem,
Minas Gerais, 32210-902, BR.
"Management" means senior management of the Group.
"Offer" means the voluntary partial cash offer made by the Offeror to Shareholders to purchase
14,086,156
Shares on the terms and subject to the conditions set out in the Offer Document at an offer
price of GBP 28.50 per Share.
"Offer Announcement" means the announcement by the Offeror dated 30 May 2023 relating to the Offer.
"Offer Document" means the offer document published by the Offeror dated 19 June 2023 containing the full
terms
and conditions of the Offer.
"Offer Price" means GBP 28.50 per Share.
"Offer Shares" means 14,086,156 Shares.
"Offeror" means Ignite Luxembourg Holdings S.à r.l.
"Period" means the five months ended 31 May 2023.
"PRA" means the Prudential Regulation Authority.
"QIP" means Qualified Institutional Placement.
"relevant persons" has the meaning given in paragraph 11 above.
"Response Document means the exchange rate of EUR 1:GBP 0.85831 as at 16:00 London time on 26 June 2023, being
Exchange Rate" the last Trading Day prior to the date of the Response Statement, as derived from data
provided
by Bloomberg.
"Response Statement" means this announcement.
"Restricted Jurisdiction" has the meaning given in the section titled "Important Information" above.
"Restricted Person" any person in, or acting for the account or benefit of persons in, any Restricted
Jurisdiction
(but only to the extent that such person is acting for the account or benefit of persons in
any Restricted Jurisdiction); or (b) any person other than a relevant person.
"RHI Magnesita" or the means RHI Magnesita N.V., a company registered in the Netherlands with registered number
"Company" 68991665
with its registered office at Kranichberggasse 6, 1120 Vienna, Austria.
"Rh ône " means Rhône Holdings VI L.L.C.
"Share" or "Shares" means the existing unconditionally allotted or issued and fully paid (or credited as fully
paid) ordinary shares of EUR 1.00 each in the capital of the Company and any further such
shares which are unconditionally allotted or issued and fully paid (or credited as fully
paid)
before the Offer closes but excluding any such shares held or which become held in
treasury.
"Shareholders" means the holders of Shares and/or dematerialised depositary interests representing
entitlements
in the Shares.
"Tendered Shares" means Shares which have been validly tendered in accordance with the Offer Document.
"Trading Day" means a day on which the London Stock Exchange is open for the trading of shares.
"Treasury Shares" means, at any time, Shares held by the Company in treasury.
"United Kingdom" or "UK" means the United Kingdom of Great Britain and Northern Ireland.
"United States" or "US" means the United States of America, its territories and possessions, any state of the
United
States of America, the District of Columbia and all other areas subject to its jurisdiction
and any political sub-division thereof.
In this document:
All references to "pounds", "UK Pound Sterling", "GBP", "pounds
Sterling", "Sterling", "GBP", "pence", "penny" and "p" are to the
lawful currency of the United Kingdom.
All references to "euros", "EUR" and "EUR" are to the lawful
currency of the member states of the European Union that adopted
the single currency in accordance with the Treaty of Rome
establishing the European Community (as amended)
All references to statutory provision or law or to any other
order or regulation shall be construed as a reference to that
provision, law, order or regulation as extended, modi ed, replaced
or re-enacted from time to time and all statutory instruments,
regulations and orders from time to time made thereunder or
deriving validity therefrom.
Words importing the singular shall include the plural and vice
versa, and words importing the masculine gender shall include the
feminine or neutral gender.
For further enquiries, please contact:
Chris Bucknall, Head of Investor Relations
Tel +43 699 1870 6490
E -- mail: chris.bucknall@rhimagnesita.com
For media enquiries:
Hudson Sandler
Tel +44 020 7796 4133
E-mail: rhimagnesita@hudsonsandler.com
About RHI Magnesita
RHI Magnesita is the leading global supplier of high-grade
refractory products, systems and solutions which are critical for
high-temperature processes exceeding 1,200degC in a wide range of
industries, including steel, cement, non-ferrous metals and glass.
With a vertically integrated value chain, from raw materials to
refractory products and full performance-based solutions, RHI
Magnesita serves customers around the world, with around 13,500
employees in 33 main production sites and more than 70 sales
offices. RHI Magnesita intends to leverage its leadership in terms
of revenue, scale, product portfolio and diversified geographic
presence to target strategically those countries and regions
benefitting from more dynamic economic growth prospects.
The Group maintains a premium listing on the Official list of
the London Stock Exchange (symbol: RHIM) and is a constituent of
the FTSE 250 index, with a secondary listing on the prime segment
of the Vienna Stock Exchange (Wiener Börse). For more information
please visit: www.rhimagnesita.com
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (596/2014/EU).
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END
RSPSESSWWEDSEIM
(END) Dow Jones Newswires
June 27, 2023 03:53 ET (07:53 GMT)
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