RHI Magnesita before its major acquisition in the US

Austro-Brazilian non-profit organization RHI Magnesita It is looking to expand its presence in the US with a major acquisition. Resco Group, an American manufacturer of aluminum oxide monoliths and refractories, is to be acquired, the company announced on Monday. Resco operates seven plants and two raw materials sites in the United States and two operations in the United Kingdom and Canada. The company is valued at $430 million.

The reason for the acquisition was to increase local production in the US, it said in a release. Currently, 50 percent of US 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 sales were $252 million, pre-tax profit was $20 million and total assets were $191 million.

Borgas: Supply chains must be shortened

RHI Chairman of the Board Stephen Borges Commenting on the acquisition: “This acquisition leverages our 'local to local' manufacturing strategy and will shorten supply chains, improve our response speed and increase the security of supply of inert goods to our customers.”

Purchases naturally affect the balance sheet as well. “In the medium term, synergies will arise from restructuring the shared supply chain, which will take approximately two years and cost €60 million, including restructuring efforts at plants outside the US,” RHI listed.