FLSmidth has offered AU$ 270 million to acquire Ludowici Ltd, a leading provider of coal centrifuges, vibrating screens and complementary wear resistant products and services for the minerals industries, and has begun due diligence under an agreement signed by the companies. Assuming the successful completion of due diligence and the absence of a superior proposal, Ludowici’s Board of Directors has indicated they will recommend the transaction to the company’s share.
Strategic rationale and financial highlights
The acquisition of Ludowici will allow FLSmidth to complete its coal processing flow sheet and improve its copper and iron ore offerings with leading technologies and brands. With some 450 employees and approximately 65% of its turnover in Australia, the acquisition will also expand FLSmidth's presence in this important mining region and support the Danish company’s expansion of its customer services offering. Approximately 60% of Ludowici's turnover relates to customer services activities, including spare parts and consumables.
The acquisition will substantially strengthen FLSmidths product offering to the coal industry: “What GL&V Process was to FLSmidth in copper, Ludowici would be for FLSmidth in coal. Coal is equal in size to all other minerals segments combined in terms of material handled, and with the addition of Ludowici's products we would be able to offer coal customers a unique one source solution", commented FLSmidth’s group CEO, Jørgen Huno Rasmussen.
It is expected that the proposed acquisition would lead to a number of sales and cost synergies. FLSmidth will evaluate potential synergies after completion of the acquisition.
Process and time line
Over the coming weeks, FLSmidth will conduct commercial, financial and legal due diligence and negotiate the transaction documents, including a Scheme Implementation Agreement with the Ludowici’s Board of Directors. Subject to satisfactory completion of due diligence and agreement on the final terms of the acquisition, FLSmidth and Ludowici anticipate executing the Scheme Implementation Agreement within 7 weeks, with the scheme of arrangement being considered by Ludowici's shareholders in May 2012.
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