Ruukki, Sylvania to seek JV after terminating merger

Finance

Publishing Date: 26 Oct 2009 12:07pm GMT
Author: Mining Journal

A proposed merger between Ruukki Group plc and Sylvania Resources Ltd has been called off, following difficulties in implementing the merger.

“The parties have faced serious obstacles hampering the planned merger merger as well as the estimated benefits it was expected to generate,” said a Ruukki statement.

Alwyn Smit, Ruukki’s chief executive officer, says the parties will now pursue a joint venture of some form with Sylvania.

“Subject to substantial due diligence following the announcement of the merger agreement, it was decided by both parties that operational synergies could be better exploited through more focussed joint venture opportunities,” said Mr Smit.

According to an investor presentation on the deal, Ruukki was to issue 119.6 million shares to Sylvania shareholders in a deal valued at E268 million (US$400 million).

The two parties said the deal would have allowed for the smelting of Sylvania’s high chrome, low-grade production to be smelted through Ruukki’s Mogale DC furnaces in South Africa.

“Sylvania, is continuing to pursue its long-term strategic goal of gaining access to downstream platinum processing capacity in order to expand its low cost tailings treatment and near surface platinum group metal (PGM) mining business model,” said the company.