Meridian Technologies, the world’s largest magnesium die casting company, is to be acquired for $CDN200m by a consortium of investors led by the Norwegian entrepreneur Jostein Eikeland who chairs his Swiss holding company Estatia.
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Based in Ontario province, Canada, Meridian claims the largest market share in the magnesium die casting market and said it is also the only magnesium die caster with global manufacturing, engineering and sales operations in North America, Europe and Asia.
Key customers include General Motors, Ford, DaimlerChrysler, Fiat, Opel, VW, Land Rover and BMW.
The Current owners of Meridian – Teksid of Italy (a subsidiary of Fiat Group) and Norsk Hydro – have agreed to sell the company to the consortium in an all cash transaction financed through a combination of debt and equity.
The acquiring consortium comprises Estatia (a Swiss holding company controlled by Eikeland), and a collection of investors led and arranged by Landsbanki of Iceland, with debt financing underwritten by GE Capital Commercial Finance and Landsbanki. Landsbanki is the lead financial advisor to the acquirer with BZ Bank and Straumur Burdaras as co-advisors.
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By GlobalDataThe acquisition of Meridian Technologies substantially increases Eikeland’s interests in magnesium die casting operations. He already has a 28% equity holding in Tonsberg Magnesium Group International (TMGI, a Scandinavian magnesium die casting company is quoted on the Stockholm Nordic Growth Market (NGM Equity)).
“Magnesium is set to be the metal of our times. It is far lighter than steel and aluminium, with the best strength to weight ratio of all three metals. With high oil prices set to remain, magnesium can significantly reduce the weight of, and hence improve the fuel economy of vehicles,” said Eikeland in a statement.
“With a cost advantage over aluminium, magnesium use in the automotive industry continues to grow over 10% per year. This offers a tremendous opportunity for us to build a global manufacturing base and brand that will be synonymous with the adoption of this metal throughout components manufacturing.”
Magnesium is the lightest structural material and the eighth most abundant element in the earth’s crust. It is produced from sea water, brines and magnesium-bearing minerals which offer unlimited reserves. Annual production was 350,000 metric tons in 1990 but had grown to 500,000 metric tons in 2005.
Magnesium components are widely used in automotive and other industries as they are 75% lighter than steel and 33% lighter than aluminium, with a high impact resistance.
The cost of magnesium has fallen in recent years as supply of the raw material has increased and the current price stands below that of aluminium.
The low cost, high strength to weight ratio and the increasing technical ability to cast complex magnesium components has led to its mainstream use in the automotive industry where its use is growing over 10% per year.
