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Aussie screen specialist receives offers from Danish, British giants

Based in Brisbane, Ludowici is one of Australia?s oldest companies. It was first established in 1854 as a tannery and its range of products has been diverse, from leather springs for Cobb & Co coaches to the boots Douglas Mawson wore on his trip to the Antarctic. Ludowici?s quarrying-specific specialities today include wear products, screens and feeders, screen media and rubber technologies. Approximately 450 of Ludowici?s employees and 65 per cent of its turnover are based in Australia, with another 550 people employed in South Africa, India, China, Chile, Peru and the United States.
For the 12 months ended on 30 June, 2011, Ludowici posted a turn over of $A211.9 million, EBITDA of $A25.5 million and EBIT of $A18.9 million. For the financial year ending 31 December, 2011, it is expected Ludowici will have generated a proforma EBITDA of $A28 million and EBIT of $A22 million. Ludowici?s 2011 results will published in late February 2012.
In late January, FLSmidth, which supplies cement plants and technology for cement producers and full plant and systems to the minerals industry worldwide, entered into a process agreement with Ludowici to acquire all Ludowici shares at a price of $A7.20 per share, corresponding to an enterprise value of approximately $A267 million on a cash and debt-free basis.
Under the process agreement, the Ludowici board of directors permitted FLSmidth to perform a confidential due diligence investigation and the parties agreed to negotiate the terms of a detailed scheme implementation agreement, reflecting the key commercial terms agreed in the process agreement. Ludowici?s board also recommended to shareholders FLSmidth?s offer to acquire all of Ludowici?s shares at $7.20 per share in the absence of a superior tender.
A counter-offer for Ludowici, however, has come from the British minerals, oil and gas, and power and industrial giant The Weir Group. On 10 February, 2012, Weir announced it had made an indicative proposal to acquire all of the share capital of Ludowici Limited by way of a scheme of arrangement, at an indicative price of $7.92 per Ludowici share, corresponding to an estimated enterprise value of $A294 million on a cash and debt-free basis. The indicative price offer is a 10 per cent premium to the indicative offer made by FLSmidth in January.
“Ludowici is a well known and respected brand in the coal processing sector,” said Keith Cochrane, Weir’s chief executive. “The potential acquisition would extend Weir’s offering in minerals processing and expand our exposure to the attractive and fast growing coal sector where Weir is relatively unrepresented. As a part of the global Weir Minerals business, we would look to accelerate the growth of Ludowici, consistent with Weir’s 2010 acquisition of Linatex.”
“With our own strong presence in the Australian mining sector, Weir has followed the development of Ludowici and is aware of the value embedded in the strong Ludowici brand, developed over 154 years,” said Rob Brown, Weir’s regional managing director in Sydney. “The combination of Weir’s existing Australian operations with Ludowici represents a compelling opportunity for both companies, their customers and their shareholders.”
FLSmidth CEO J?rgen Huno Rasmussen has said his company has the right to increase its offer for Ludowici in the event of a rival bid. When announcing FLSmidth?s original bid in January, he said the offer presented a great opportunity ?to continue Ludowici?s 154 year history of providing leading innovative minerals technology to its customers? and the partnership between FLSmidth and Ludowici would ?lead to a number of sales and cost synergies?.
In a report by Reuters UK, FLSmidth spokesman Jesper Larsen stated that FLSmidth would continue and conclude its due diligence on Ludowici before considering Weir’s rival offer. He added that under FLSmidth’s agreement with Ludowici, it had a priority as a buyer so long as it could match any superior bids.
Under the terms of the FLSmidth/Ludowici process agreement, Ludowici?s shareholders are to have the opportunity to endorse the two parties? scheme implementation agreement at a meeting in May.
In a statement to Quarry in late January, Patrick Largier, the managing director of Ludowici Ltd, said of the FLSmidth offer: “It is pleasing that the value that we have created in Ludowici has been recognised by this attractive offer. Ludowici has grown strongly over the past three years both in terms of revenue and profit as we have worked at continuing to provide benefits for our customers using innovation and supported by high service content.
“The building of Ludowici into a leading global business servicing the mineral processing industry is a credit to all employees. This proposed transaction has my strong support and I believe that it will allow Ludowici to grow faster and to more quickly realise our full potential.
“In conclusion, I believe that this is a very positive development for Ludowici which will provide the company and its employees many additional opportunities in the future.”
Quarry will report on further developments as they become available.
Sources: FL Smith, The Weir Group, Ludowici, The Australian, Reuters UK,

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