Saudi Arabian Amiantit Co. (Amiantit) signed on Monday a joint venture agreement with Austria’s WIG Wietersdorfer Holding GmbH (WIG), Amiantit said in statement to Tadawul.
Under the agreement, Amiantit’s European pipe manufacturing and sales companies and its Flowtite technology will be merged with the Hobas AG group of companies in Europe.
The entities under Hobas to be included in the merger are manufacturing facilities in Germany, Austria, Poland and several sales companies in Western and Eastern Europe, as well as in the Balkans. They will also include the Hobas technology and R&D center.
Amiantit’s pipe business represents yearly sales of about SAR 470 million, with a profit of SAR 6.6 million in 2016.
The combined contributed assets and liabilities will amount to SAR 381 million and SAR 185 million, respectively. The Hobas figures are of comparable magnitude, the statement said.
The valuation of both businesses is conducted by PricewaterhouseCoopers (PwC), and the merged entity will be equally owned by both parties, the statement said.
The deal would only involve a final cash settlement, which is yet to be determined, to compensate for the differences between the respective net financial debts of both companies defined as of Dec. 31, 2016.
The merger will be controlled by a supervisory board of four members that will be equally appointed by Amiantit and WIG.
The joint venture is subject to the approvals of the authorities, which are expected to be obtained before June 30, 2017.
Until then, both parties will continue to function independently, and the accounting implications will be computed at that time.
The deal may be rescinded if such approvals are not obtained before Dec. 16, 2017.
Amiantit does not expect a negative impact on its results or its equity from the deal, and it doesn’t expect a net cash outflow either, the statement added.
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