Business News

MFC Industrial Ltd. Acquires Majority Interests in ACC Resources Co., LP and Possehl Mexico S.A. de C.V.

Thursday 29. November 2012 - MFC Industrial Ltd. ("MFC") (NYSE: MIL) announces that it has acquired a majority interest in Park Ridge, NJ-based ACC Resources Co., L.P. ("ACCR") and Mexico City-based Possehl Mexico S.A. de C.V. ("Possehl"). Unless otherwise noted, all dollar amounts are in United States dollars.

ACCR and Possehl are privately owned, fully integrated commodity supply chain companies, specializing in industrial raw materials, chemicals and various other products. The acquisition of these companies expands our existing global supply chain network, reaching further into the North and Latin American markets. The addition of these established businesses brings new product lines that will integrate well into MFC’s existing commodities business. All key managers of ACCR and Possehl will remain with the acquired companies, and both ACCR and Possehl will retain their established branding identities as well as their current business locations. Together ACCR and Possehl have approximately 100 employees.
TRANSACTION HIGHLIGHTS
-MFC acquired 70% of the shares of ACCR and
60% of the shares of Possehl, with the
balance of the shares owned by members of
the companies’ operating management.
-Purchase price under the acquisitions was
approximately $21 million in cash.
-The MFC group gains additional experienced
operating management.
-The acquisition results in expansion into
new commodities and markets.
HISTORY
ACCR, established in 1957, has a head office in New Jersey and a network of offices in Latin America including Argentina and Brazil, as well as a sourcing office in China. Possehl, which was established in 1986, has a network of offices, warehouses and agencies in Mexico. They source commodities internationally and sell primarily in Mexico.
PRODUCTS
ACCR and Possehl offer a wide variety of products with various size and packing alternatives. Their objective is to add more products – for the same industry segments. Products include raw materials for various industries such as:
PRODUCTS
Refractories and ceramics, which include:
bauxite, flint clay, magnesium oxide, alumina
cements, chrome ore and other products.
Steel and foundry, which include: ferro alloys,
metals, coal, coke and other carbon products,
master alloys, furnace additives &
conditioners and other products.
Talcs and plastics, which include: own brand
talcs for the paint and plastics industry,
seven grades of Possalc and one of Possahl, pp
& pe, titanium dioxide -rutile and anatase,
mica, wollastonite and calcium carbonate.
Chemical and minerals, which include: products
for the detergent, cosmetic, glass, and
leather treatment industries. Developing
ceramic proppants, fracturing sands and baryte
powder api grade for the oil and gas industry.
Food and beverages, which include: citric acid,
phosphoric acid, sodium cyclamate (sweetener),
sodium bicarbonate and gum.
Animal feed integrates, which include: mineral
additives for animal feeds to maintain and
support healthy growth
Other Chemicals & Minerals, which include: acid
grade fluorspar, aluminium fluoride,
aluminium hydroxide, barium carbonate, calcium
chloride, magnesium chloride and carbon
filters and felts from Japan.
Many of the products marketed by ACCR and Possehl are new to MFC’s commodities platform. With ACCR’s and Possehl’s technical knowledge these products can be utilized very effectively within existing MFC markets. Possehl has ranges of branded products such as Possalc, which are recognized for their reliability and quality.
EXPERTISE
The expertise of ACCR and Possehl includes:
EXPERTISE
Key location warehousing and logistics services.
Product development.
Sourcing.
Packaging and distribution.
Just-in-time delivery.
ACCR’s and Possehl’s businesses are primarily in different geographical markets to those of MFC, and the acquisition will serve as a spearhead into the fast-growing markets of Latin America. The acquired companies and MFC will now complement each other with greater coverage, especially in western hemisphere markets and with an excellent sourcing center in Beijing. The intention is also to expand the Chinese activities of ACCR and Possehl to not only sourcing, but also selling various products and commodities. Our MFC Shanghai office and experience in the region will be an asset in this development.
ACCR and Possehl have jointly developed relations with major suppliers, building up a network of reliable quality partners for the existing product lines. They have worked with these suppliers to develop and introduce new products to their existing client base, many of whom are Fortune 500 Companies.
PURCHASE PRICE
The combined acquisition price for 70% of ACCR and 60% of Possehl was approximately $21 million and was determined based on the Net Tangible Asset Value (“NTAV”) of the entities as of July 31, 2012. The purchase price is subject to adjustment based on pending valuations on real property. In addition, there is also an option to acquire up to all of the remaining shares of ACCR, exercisable after one year and based on the same NTAV price formula, to facilitate future retirement of a member of management of ACCR. MFC’s notable financial strength and its already substantial global reach will be resources that will enable growth and agility for the combined companies.
FINANCIAL HIGHLIGHTS
COMBINED UNAUDITED FINANCIAL HIGHLIGHTS OF
ACCR AND POSSEHL
As December 31, 2011. All amounts in
thousands
Current assets $104,758
Total assets 113,061
Current liabilities 71,918
Total liabilities 73,054
We will work with ACCR and Possehl towards a more global approach to sourcing looking towards Europe, India and the former Soviet Union countries in particular. These are areas where MFC will be able to assist by utilizing our established European and Indian companies.
COMMENTS
Chairman Michael Smith commented: “We are very pleased with this acquisition as it expands our existing commodities platform and geographic reach. MFC views this combination as a commercial partnership to grow both businesses into a stronger, united company. Our new partners are keeping a substantial amount of their capital in this larger supply chain company, which can now grow with new products and in new markets.
“ACCR and Possehl management have good relationships that they have built up over many years with customers and suppliers who are keys to success. This acquisition aggregates much greater sourcing power, and a wider range of commodities, and with our financing ability we can increase the value-added aspects for all of our customers and suppliers.”
Mr. Smith concluded: “Our goal is to add strong value-added service for our global clients and especially with our ability to source products and financing not only in China, but in other global markets. We welcome the employees, suppliers, customers and stakeholders of ACCR and Possehl into the MFC family and look forward to working together.”
“It is ACCR, Possehl and MFC’s belief that China will be an excellent sourcing market. As China slows down, their prices should start to come down. They will require relationships with reliable counterparties and ready financing from international supply chain organizations.”