SigmaRoc has signed an agreement to acquire Nordkalk

Founded in 1898, Nordkalk is one of Europe’s prime limestone products operators, having cemented, over the years, strong market positions in the highly desirable Northern European cluster. With over 820 employees and a rich history spanning over a century, the Company’s platform consists of more than 30 locations across 10 countries. It generated underlying revenues of €276m and underlying EBITDA of €67m in 2020.

London, 15 July 2021 – SigmaRoc plc (“SigmaRoc”, the “Group”), the London-listed quarried materials group, has today signed an agreement to acquire Nordkalk (the “Transaction”, the “Company”), Northern Europe’s leading limestone producer from Rettig Group based on a €500m enterprise value (“EV”) on a cash-free debt-free basis. The Transaction will be consummated through a reverse takeover under AIM rules.

Key highlights

• EV of €500m
• Funded through a combination of £130m drawdown of new credit facility from Santander and BNP Paribas and £260m equity raise
• Rettig Group to become a key shareholder of SigmaRoc with a ca. 8% stake
• Pro forma underlying 2020 revenues and EBITDA of £376m and £83m respectively
• Pro forma 2020 Net Debt/EBITDA of 1.97x
• Significantly earnings enhancing on acquisition
• Deal expected to close during the course of Q3 2021

Commenting on this transformational acquisition, SigmaRoc Chairman, David Barrett, stated:

“Nordkalk is a well-established & well-respected business with a substantial asset footprint spanning across Northern Europe. It has a long history of success and much future potential. This acquisition creates a raft of new opportunities for SigmaRoc to capitalise on in the months and years ahead. I welcome Rettig Group as a shareholder to SigmaRoc. Their commitment is a strong sign of confidence in the future of our Group.”

The Group’s CEO, Max Vermorken, added:

“The acquisition of Nordkalk, Northern Europe’s leading limestone products company, is a great steppingstone in the evolution of our Group, expanding our footprint across Northern European markets. We are purchasing a high-quality business at the right point in the cycle and at an attractive valuation. Nordkalk meets all our stringent investment criteria as a self- contained and asset backed business which will bring the Group significant earnings growth. We look forward to helping Nordkalk and its experienced management team on its path to continued success as we perpetuate its 120-year history, name and success.”

Matts Rosenberg, Rettig Group’s CEO, commented:

“We are very happy to have found SigmaRoc as a new owner of Nordkalk. As long-term owner of Nordkalk we believe that the change of ownership comes at the right time and that it is the right strategic next step for Nordkalk’s business. As new shareholders in SigmaRoc we will remain supportive of the future of not just Nordkalk, but the entire SigmaRoc Group, and we look forward to many years of continued success and growth.”

Nordkalk highlights

With over 820 employees and a rich history spanning over a century, the Company’s platform consists of more than 30 locations across 10 countries. It generated underlying revenues of €276m and underlying EBITDA of €67m in 2020.

Limestone is found in many products: it is an essential input used in numerous industries including construction, agriculture, environmental protection, chemicals, metals & mining and pulp & paper. In addition to the traditional segments served since inception, the Company keeps opening new frontiers through innovative applications. Circular economy products comprise 13% of Nordkalk’s sales volumes and the Company aims at increasing this number. Nordkalk has a long history of using its by-products which results in its material efficiency being more than 90% and rising. Furthermore, the Company has set out a clear ambition towards fossil-free and carbon neutral operations.

Financial considerations

The Group intends to finance the Transaction through a combination of a £305m credit facility equally underwritten by Santander and BNP Paribas and £260m equity raise. Santander has consistently been a strong strategic partner to SigmaRoc having arranged five financings since its early days in 2016.

The financing structure abides by our guiding principle of managing a robust balance sheet. As a result, the pro-forma 2020 ND/EBITDA is 1.97x. Moreover, it is worth noting our EBITDA will achieve a 3x increase post-deal.

Industrial rationale

Nordkalk presents a compelling investment case and is a unique opportunity to accelerate the growth of SigmaRoc. Founded in 1898, it is one of Europe’s prime limestone products operators, having cemented, over the years, strong market positions in the highly desirable Northern European cluster. Nordkalk’s well invested and strategically located asset base is properly positioned to competitively supply all key pockets of demand of the jurisdictions it operates in. The Company has developed a diversified offering across a wide range of end applications.

Nordkalk’s seasoned management team has demonstrated its ability to significantly expand margins over the last two and a half years, through a bespoke operational transformation program aimed at maximising profits out of lasting tailwinds and supportive secular trends.

In all markets, the integration of the Company creates a series of opportunities for SigmaRoc to further roll-out its proven “Invest, Improve, Integrate, Innovate” model and expand through bolt-on acquisitions. As a long-term minded owner, Nordkalk’s sites will continue to be developed through platform integration to ensure optimal geographical reach, while maximising synergies and cross selling.

Under the stewardship of Rettig Group, its custodian for the past 20 years, not only has the Company showcased its long-term commitment to sustainability and environmental protection, but also its engrained culture of innovation through a series of value-added solutions that have consistently been brought to market year over year. The latter is a testament of its longstanding partnership with its customers.

Following completion, Nordkalk will form SigmaRoc’s sixth platform and add a core limestone products stream to the Group. Abiding by SigmaRoc’s successful and decentralised operating principle of “federation of companies”, Nordkalk’s senior management team will remain in place under the leadership of Paul Gustavsson, who will join the Group’s Executive Committee.

Transaction structure

The Transaction will be consummated through a reverse takeover under AIM rules. Rettig Group will become a meaningful shareholder in SigmaRoc with a ca. 8% stake and has agreed to a twelve-month lock-up followed by a further twelve-month orderly market arrangement.

Enlarged group outlook and trading update

SigmaRoc generated revenues of £84.8m and underlying EBITDA of £14.9m in the first half of 2021, representing a like-for-like* increase of 13% and 14%, respectively, over the same period in 2020. Nordkalk generated revenues of £126.5m (€144.6m) and EBITDA of £31.3m (€36.0m), representing an increase of 8% and 17%, respectively, over the same first half period in 2020. SigmaRoc’s earnings per share for the 6 months period ended 30 June 2021 is expected to be approximately 2.5 pence.

*Like-for-like comparatives are adjusted to include pre-acquisition results of subsequently acquired businesses.

Advisors

Munegu Partners acted as lead financial advisor together with Santander and BNP Paribas also acting as joint-bookrunners on the financing. Peel Hunt, Liberum and Numis acted as joint book runners on the equity funding. Strand Hanson acted as nominated advisor to the company (“NOMAD”). Fieldfisher and Eversheds acted as legal counsel. PKF acted as transaction services advisor and Golders acted as environmental and operational advisor. Bates-Wells acted as legal adviser on banking matters. PKF Littlejohn acted as transaction advisor, Golder Associates as environmental and operational advisor. Howden M&A advised on insurance.