- Fund offers to buy 20% stake at 40% premium
- Shares jump 22% on above-average volume
- Austrian entrepreneur owns key stake
Investors in FTSE 250 specialty mining materials firm RHI Magnesita (RHIM) must have thought Christmas had come early when they saw their shares open 20% higher this morning after trading at six-month lows last Friday.
The shares were trading up 462p or 22.5% to £25.20 by mid-morning on heavy volume after the Austria-based firm received an unsolicited offer for 20% of its equity.
A ‘COMPELLING’ OFFER?
Ignite Luxembourg Holdings, a company ultimately controlled by transatlantic middle-market private equity firm Rhone Group, offered to buy a 20% stake in RHI Magnesita at £28.50 per share, a premium of almost 40% to the previous closing price.
Ignite described its offer to buy the non-controlling stake as ‘an opportunity for shareholders to crystalise their investment at a compelling valuation and significant premium’.
Together with the declared dividend of 95p per share, the offer actually represents a price of £29.45 or a premium of 43.6% to the previous closing price of £20.50.
If its offer is successful, Ignite would ‘seek to achieve appropriate representation in the board of directors of the company’.
Meanwhile, no relationship agreement or any other governance arrangement has been agreed between Ignite and the target company.
RADIO SILENCE
RHI Magnesita seemed caught off-guard by the news, saying in an official response it noted the announcement and was considering its response.
Just a few weeks ago the firm, which makes refractory products used in the production of steel, cement, glass and many other primary industries, cautioned that lower sales volumes were likely to lead to pricing pressure which it hoped to be able to offset through cost reductions.
Austrian entrepreneur Martin Schlaff is the largest shareholder in RHI Magnesita with a 28.4% stake held via a private family foundation.
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