Vesuvius agrees to buy Morgan Advanced's Molten Metal Systems business
Vesuvius PLC on Friday said it has agreed to acquire Morgan Advanced Materials PLC’s Molten Metal Systems business for a total enterprise value of £92.7 million.
Vesuvius is a London-based molten metal flow engineering and technology company, and Morgan is a Windsor, England-based manufacturer of carbon and ceramic materials.
The MMS business is part of Morgan’s Thermal Products segment, and provides crucibles products and melting solutions used in the production of non-ferrous metals such as zinc, aluminium, copper, brass, bronze and precious metals. It comprises Morganite Crucible (India) Ltd, in which Morgan owns a 75% stake, and the remaining worldwide MMS business wholly-owned by Morgan.
The acquisition was agreed on a cash-free, debt-free basis. Consideration for the non-Indian business is £20 million cash, while the consideration for the Indian business will be satisfied via the issue of 1.2 million new shares in Vesuvius’s Indian subsidiary Foseco India Ltd to Morgan. The issued shares will be valued at £55.8 million.
This brings the total consideration payable to Morgan to £75.8 million.
MMS recorded a turnover of £42.5 million in 2024, roughly 20% of which was in India, and adjusted operating profit of £5.2 million. The business reported 2024 earnings before interest, tax, depreciation and amortisation of about £8 million.
Vesuvius said the acquisition would take its Foundry unit’s share of revenue from non-ferrous sales to around 27%, against 21% in 2024. Vesuvius expects to realise ‘significant cost synergies’ in manufacturing and overhead costs, increasing Ebitda by at least 50%.
Vesuvius Chief Executive Officer Patrick Andre said: ‘This transaction will enable us to accelerate our growth in the non-ferrous market segment, and in India, both being core growth areas for us.
‘It is highly complementary to our existing business and due to significant cost synergies, will contribute to the improvement of the group’s and Foundry division’s profitability. It is also structured in a cash-efficient way, neutral to gearing and will support our objective of deleveraging in the coming months.’
The takeover is expected to complete by early October, at which point Foseco will own 75% of Morganite Crucible, while Vesuvius will hold around a 64% stake in Foseco. Morgan will own around a 15% stake in Foseco on an enlarged pro forma basis.
The acquisition of the 75% stake in Morganite Crucible will also trigger a mandatory tender offer to be made by Foseco to shareholders of the remaining 25% stake.
‘This disposal demonstrates the disciplined approach we take to our portfolio,’ said Morgan Chief Executive Officer Damien Caby.
‘It leaves Morgan more simple and better aligned to our strategy. We remain focused on delivering against our strategic initiatives and believe that today’s transaction will realise significant value for shareholders, as well as better positioning the group to deliver higher organic growth returns.’
The takeover remains subject to the approval of Foseco shareholders.
Shares in Vesuvius were up 1.5% at 367.60 pence in London on Friday morning, giving it a market capitalisation of £909.3 million. Morgan Advanced Materials shares rose 4.3% to 215.97p, giving it a market capitalisation of £601.9 million.
Morgan also on Friday said it has instructed Investec Bank PLC to launch the third tranche of its ongoing share buyback immediately upon completion of the second tranche. Each tranche to date has been for up to £10 million, under a total buyback programme for up to £40 million.
The company has bought back £4.7 million in shares to date under the second tranche, which began on March 5.
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