Austrian firm RHI AG is acquiring almost the entire promoter holding in the public-listed Orient Refractories Ltd (ORL) in a deal worth Rs 225 crore ($41 million) as it expands into emerging markets.

ORL is a producer of special refractories and monolithic products, and is promoted by the family members of SG Rajgarhia. The promoters are selling 43.6 per cent out of their 48 per cent holding, as of September 30, 2012.

According to the agreement with the promoters, RHI’s wholly owned affiliate is also making an open offer to the public shareholders for up to an additional 26 per cent stake.

The transaction and open offer price is Rs 43 per equity share. If RHI manages to buy the entire 26 per cent additional stake in ORL, its total investment would be around Rs 360 crore ($66 million).

ORL scrip crashed 6.1 per cent to Rs 36.95 a share on the BSE in a strong Mumbai market on Tuesday.

ORL develops and produces a range of special refractories and monolithic products, catering to the iron and steel industry at home and abroad. Headquartered in Delhi, ORL’s manufacturing and R&D facility is located in Bhiwadi (Rajasthan) while its eight sales offices are located across the country.

For the first half of FY13, ORL had revenues of Rs 182 crore with net profit of Rs 19.7 crore. The deal values it at 13x its annualised net profit for the year ending March 31, 2013.

The deal will provide push for RHI in pursuing its growth strategy focused on emerging markets and strengthen its global market position in the flow control business segment with special refractories and monolithics. ORL’s business is complementary to RHI’s current presence at the mini mills in India.

(Edited by Sanghamitra Mandal)

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