Cerha Hempel Spiegelfeld Hlawati has advised RHI AG in connection with its agreed merger with Brazilian Magnesita Refratários S.A. with a view to creating a leading provider of refractory products. The new company will be named RHI Magnesita.
The management board of RHI AG ("RHI") has reached an agreement with the controlling shareholders of Magnesita Refratários S.A. ("Magnesita"), consisting of affiliated undertakings GP Investments ("GP") and Rhône Capital ("Rhône"), to acquire a controlling stake of at least 46%, but no more than 50% plus one share, of the total share capital of Magnesita (the "Transaction"). The purchase price for the 46% stake comprises a cash component of EUR 118 million and 4.6 million new shares to be issued by RHI Magnesita, which will have its registered office in the Netherlands and be listed on the London Stock Exchange. Based on RHI's volume-weighted average price over the past six months, the 46% stake in Magnesita is valued at EUR 208 million. Magnesita's entire share capital is currently valued at EUR 451 million.
The transaction is expected to close in 2017 and is subject, inter alia, to (i) the approval of the competent competition authorities, (ii) the migration of RHI's registered office to the Netherlands by means of a cross-border merger, (iii) the listing of the shares of RHI Magnesita in the premium segment of the Official List on the Main Market of the London Stock Exchange, and it is also conditional upon (iv) the value of the settlement claims made by any shareholders of RHI wishing to withdraw from the company during the course of the cross-border merger not exceeding EUR 70 million. Both the cross-border merger of RHI and the associated organizational changes to be made within the RHI Group require the approval of RHI's shareholders' meeting. Once the corporate restructuring has been completed, RHI's shares will be delisted from the Vienna Stock Exchange.
The Transaction is being financed by additional debt capital as well as the issuance of 4.6 to 5.0 million RHI Magnesita shares to the controlling shareholders of Magnesita.
Following completion of the Transaction, RHI Magnesita or a group company will make a public mandatory offer to the remaining Magnesita shareholders. At the same time, a voluntary takeover offer of EUR 8.19 (cash) will be made for each Magnesita share. Under these parallel offers, up to 5.4 million new RHI Magnesita shares will be issued, with the total volume of newly issued RHI Magnesita shares possibly rising to 10 million. Depending on the result of the public mandatory offer, the controlling shareholders of Magnesita will be obliged to acquire at least 1.9 million additional RHI Magnesita shares and they will have the possibility of acquiring up to a maximum of 3.4 million additional shares. Thus, their participation in RHI Magnesita would increase to a maximum of 8 million shares. All new RHI Magnesita shares to be issued that are not accepted by the shareholders of Magnesita under the offer may be either sold on the open market or placed with institutional investors. Furthermore, RHI Magnesita may choose to combine its public mandatory offer with a voluntary offer under which it delists Magnesita and/or changes its listing from the "Novo Mercado" (new market) segment to another market segment.
RHI is a global provider of refractory products with its registered office in Austria and, according to its own figures, it generated turnover in 2015 of EUR 1,753 million. Magnesita is a provider of integrated refractory solutions, related services and industrial minerals with its registered office in Brazil. In 2015 it generated turnover of USD 1,013 million.
All legal aspects of the transaction were overseen and managed for RHI by its legal department under the watchful eye of Mag. Robert Ranftler and by a team of lawyers from DRUDE, Freshfields Bruckhaus Deringer, Pinheiro Guimarães and CHSH. CHSH was responsible for structuring the transaction in compliance with Austrian company law, capital markets law and takeover law. At CHSH, the team was headed by partner Dr. Albert Birkner (Corporate/M&A, Takeovers). His team consisted of partners Dr. Volker Glas (Capital Markets), Dr. Bernhard Kofler-Senoner (Merger Control), Mag. Heinrich Foglar-Deinhardstein (Corporate), senior associates Mag. Susanne Molitoris (Employment Law), MMag. Christian Aichinger (Capital Markets), Dr. Sarah Wared (Corporate/M&A), Dr. Alexander Babinek (Takeovers) and MMag. Dr. Michael Mayer (Merger Control), and associates Maximilian Mayer, Mag. Nadine Leitner, Alistair Heschl-Gillespie und Mag. Thomas Meier (all Corporate/M&A).