Spain-based stainless steelmaker Acerinox SA said Friday it has reached an agreement to acquire VDM Metals Holding GmbH (VDM Metals), a specialty alloys producers headquartered in Germany, from Lindsay Goldberg Vogel GmbH and Falcon Metals BV for Eur532 million ($586.28 million).
With the acquisition, Acerinox expects to boost its group net sales and EBITDA by over 20%, it said.
The transaction, subject to the approval, among others, of the European and US antitrust authorities, is expected to take place by late Q1 2020, and should allow Acerinox Group to diversify into higher value-added sectors, the company said in a statement.
“VDM Metals represents a great opportunity for Acerinox to grow into new markets and growing sectors such as aerospace, chemical industry, medical industry, oil and gas and renewable energies, water treatment and emissions control,” it said.
The planned link-up follows a spate of mergers and attempted merger and acquisition activity in European steel sector over the past year, as companies attempt to reduce costs to boost their competitiveness against high levels of imports in a sluggish market.
Last week Acerinox announced a 12% drop in melt shop output worldwide amid weaker margins and said it was locked in discussions to reduce its Spanish workforce by 300, or 16%, at its Gibraltar plant.
Acerinox will pay Eur310 million and will assume debt worth Eur57 million, plus pension plans and other liabilities to an amount of Eur165 million. Acerinox will use its existing financing lines for this acquisition.
The acquisition will be presented to employees and representatives of both companies in the coming weeks.
Until the final closing, Acerinox and VDM Metals will operate as independent companies, Acerinox said.
Following completion of the transaction, Acerinox aims to integrate both companies to extract the full value of expected synergies, it said.
Acerinox CEO Bernardo Velazquez described the planned investment as “strategic.”
“VDM Metals represents the perfect growth platform for Acerinox with solid margins and complementary products and services,” he said.
Niclas Müller, CEO of VDM Metals said becoming part of Acerinox Group presents it with “the opportunity to strengthen and grow our businesses, being aligned with Acerinox’s long-term strategy and its investment plan.”
Acerinox said it was advised in this deal by Goldman Sachs International, KPMG and Linklaters.