REFILE-UPDATE 1-Austria's RHI to buy Brazilian rival Magnesita for $500 million

Thu Oct 6, 2016 9:31am EDT
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(Amends spelling of refractory in second paragraph)

* New entity to be listed in London

* Businesses complement each other

* RHI shares drop more than 13 percent

* Analysts point to high debt burden

VIENNA Oct 5 (Reuters) - Austrian fireproof industrial materials maker RHI said it has agreed with key shareholders of rival Magnesita to take over the Brazilian company in a $500 million deal to create a global player.

Both companies supply the steel, cement and glass industry with fireproof refractory materials, but RHI derives 40 percent of its sales from slow-growing developed economies like Western Europe, while Magnesita is focused on North and South America.

The deal, however, will involve RHI taking on more debt, a source of concern for investors who sent the company's shares skidding 13 percent after it was announced.

Vienna-based RHI said in a first step it will acquire at least 46 percent but no more than 50 percent plus one share in Magnesita in cash and shares. The transaction will be financed by additional debt and the issuance of 4.6 million new shares.   Continued...