CUMI to acquire fused refractories manufacturer in South Africa

Chennai: A unit of Carborundum Universal Ltd. (CUMI) is set to acquire a South Africa-based refractory in an all cash deal that will allow the industrial chemical maker to supply to the steel sector and also improve its access in Africa, the Chennai-based company said on Tuesday.

CUMI International Limited Cyprus, a wholly owned subsidiary of CUMI India - a part of the $4.4 billion Murugappa Group – signed an agreement with Austria-headquartered RHI AG to buy the Vienna-based heat-resistant refractory products maker’s South African units - RHI Isithebe (Pty) Ltd and RHI Refractories Africa(Pty) Ltd.

The two SA businesses logged combined revenues of Rs 120 crore in 2011 growing at a 10% rate, CUMI’s vice president Dhanvanth Kumar said. Kumar refused to divulge the value of the deal, which he said will be finalized in a month’s time. He told Mint that the acquisition was a cash deal.

“We hope to have access to the steel sector and gain a ready market in South Africa through this acquisition,” Kumar said.

Isithebe is one of the largest Fused mineral manufacturing facilities in Africa and can deliver up to 30,000 tons of various fused minerals a year.

“The choice of market South Africa is interesting and may offer better growth prospects to CUMI as it is relatively less risky at this stage,” said C Venkat Subramanyam of Chennai-based investment banker Veda Corporate Advisors Pvt. Ltd. “The group has a good track record of integrating acqusitions and this buy will stand them in good stead.”