Vertically integrated speciality alloys producer Afarak Group has signed an agreement to combine with LL Resources (LLR) for a consideration of €59.3-million.
Austria-headquartered LLR is a ferro-alloy, steel products, scrap, coal, bitumen and fertiliser mining and trading company.
Afarak will issue new shares to the shareholders of LLR to the value of €59.3-million, which amounts to about 140-million new Afarak shares. Following the deal, the former shareholders of LLR will hold about 35% of the total amount of shares and votes of Afarak.
The transaction is still subject to various approvals, including merger control approval in Austria and Germany, as well as Afarak shareholder approval.
Commenting on the rationale for the merger, Afarak states the newly formed commodity group, both parties having various smelting and processing facilities, would present a European alternative to the steel and foundry industry globally, with a strong focus on environmental, social and governance.
Afarak chairperson Thorstein Abrahamsen says the company seeks to grow organically and through acquisitions. With the combination of the two companies, Afarak will have additional skilled personnel, which enables the group to continue growing and developing.
“Through the combination we will achieve synergy gains, and be more capable to offer a wider range of products to clients, operate more efficiently, improve profitability and be more competitive,” he adds.
In turn, LLR MD Dr Roman Lurf states the deal will support the company’s strategy of maximising shareholder value, including through a wider pool of talented professionals, stable and profitable production units and many new projects in the pipeline.
Lurf expects the combined entity to unlock significant potential along their value chains and represent a leading Europe-based, but globally-acting, sustainable commodity supplier.
Subject to the completion of the merger, LLR’s business will be reported as part of Afarak’s ferro-alloy segment. The combined new entity will have a turnover of about €674-million.