(Releads, adds Magnesita targets, dividend)
VIENNA May 11 Fireproof industrial materials
maker RHI, which is taking over Brazilian rival
Magnesita, said it plans to keep the dividend payout
at around $33 million in 2017 and 2018, cutting the amount per
share for the enlarged group.
The Austrian company, which has agreed to pay 450 million
euros ($489 million) for Magnesita and hopes to close the deal
by November, is paying out 0.75 euros in dividend for 2016 for
each of its around 40 million shares.
The number of shares will increase to up to 50 million
shares after the Magnesita takeover, an RHI spokesman said on
"For the combined entity, we plan to keep the dividend
payout stable at 30 million euros in 2017 and 2018," the
RHI plans to lift the payout once the combined company
manages to generate stronger cash flow, it said in its
The group aims to achieve this by savings through the
combination of the two businesses, debt reduction and organic
RHI shares gained 2 percent to 29.15 euros by 0915 GMT.
The Austrian company also adjusted its mid-term forecast for
the new entity, RHI Magnesita. It now expects organic revenue of
the combined group to increase "in line with the volume growth
in its customers' industries".
In October, it said it aimed to achieve consolidated annual
sales of up to 2.8 billion euros and an operating EBIT margin of
more than 12 percent by 2020.
RHI now aims for the margin target to be reached after 70
million euros of synergies have been achieved.
Both companies supply the steel, cement and glass industry
with fireproof refractory materials. RHI derives 40 percent of
its sales from slow-growing developed economies such as Western
Europe, and Magnesita being focused on North and South America.
RHI said it filed for merger control clearance with the
competition authorities in Brazil at the end of March and in
Europe at the beginning of May.
It expects to have a clearer picture of the outcome of the
proceedings at the end of the first half of 2017.
($1 = 0.9196 euros)
(Reporting by Kirsti Knolle; Editing by Sunil Nair)