Central Europe's leading coking coal producer, Czech-based New World Resources N.V. (NWR), has announced its intention to acquire a 25 percent shareholding in the UK-based company Ferrexpo, whose main interests are in Ukrainian iron ore assets.
Accordingly, NWR has accepted the offer of the sale of the stake in question from its majority shareholder, RPG Industries (RPGI), and thus is to buy all of RPGI's 147.16 million shares in Ferrexpo, paying 86 pence per share, reaching a total cost of £126.6 million (€163.3 million).
NWR has agreed to review the potential benefits of a formal strategic alliance with Ferrexpo, and, as a part of the transaction, the company expects to be offered representation on Ferrexpo's board of directors, while the NWR board will recommend the appointment of a Ferrexpo representative to its own board.
The transaction will be entirely funded through NWR's current cash position, which was
approximately €668 million as at June 30, 2008.
"We are taking advantage of a unique market opportunity to secure a significant holding in Ferrexpo at an attractive valuation," commented NWR's executive chairman, Miklos Salamon.
"Whilst opportunistic, this transaction is entirely consistent with our regional consolidation strategy set out at the time of our IPO in May. We believe the outlook for both coking coal and iron ore remains attractive in the region and that this transaction better positions NWR for the future," Salamon added.