This is quite a big bang announcement ! DBRL is one of the largest players in the refractory business, but being unlisted has been mostly out of public conversations. RHIM will issue 2.7 crore new shares which is around 17% equity dilution. However, revenues will jump 50% on consolidation. It’s current margins are lower than RHIM, but should improve easily with RHIM’s pricing power and operational synergies. DBRL has customer presence in the segments where RHIM is weak, and production facilities are also said to be complementary. Importantly, DBRL also has mining assets and so direct access to RM – something which RHIM hitherto lacked. The acquisition will no doubt consolidate RHIM’s position as India’s leading refractory player and reaffirms the parent’s commitment to grow the India business. RHIM is becoming indispensable to India’s steel sector ambitions.
Click here for the acquisition press release
Interestingly, yesterday’s announcement makes no mention of Hi-Tech acquisition announced in October, and how that one will be funded.
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