CMA of Australia to take over Meretec

Archiv – Shares in Australian recycling company CMA Corporation Ltd shot up more than 15% on news that it has entered into a conditional agreement to acquire UK-based Meretec Ltd for US$ 30 million (Euro 19.1 million).
Australia / United Kingdom | Shares in Australian recycling company CMA Corporation Ltd shot up more than 15% on news that it has entered into a conditional agreement to acquire UK-based Meretec Ltd for US$ 30 million (Euro 19.1 million).
London-based Meretec owns the US-based Meretec Corporation, from which CMA purchased a processing plant in Chicago earlier this year. The company is the developer and owner of the de-zincing technology that is currently being used under licence at two CMA plants – the one in Chicago and the other in Melbourne. The Meretec process removes the zinc coating from galvanised steel to produce clean black steel and high-grade zinc particulate.
According to CMA, it plans to generate revenue from Meretec through a number of channels including CMA-owned Meretec plants, joint ventures with international scrap groups, and licensing and royalty fees from third party users of the technology. CMA’s Managing Director Doug Rowe says discussions are already under way with a number of overseas companies in relation to licensing and joint venture proposals. ’This transaction opens up abundant opportunities for us and we expect Meretec will become a very significant contributor to group earnings,’€™ he says. ‘€˜Our expectation is that the Meretec acquisition will be earnings accretive in the 2009 financial year.’€™
The Meretec process currently enables CMA to process large volumes of stock and to improve the margin that can be earned on these sales. ‘€˜Major new supply agreements, such as contracts recently secured with Holden and other automotive and construction groups, boost feedstock volumes and create the potential for scale benefits from the establishment of further Meretec plants over time,’€™ Mr Rowe continues. ‘€˜The established relationship with Meretec means that we know and understand the business and can capture significant synergies and efficiencies.’€™
The acquisition is expected to provide CMA with considerable cost savings as the company currently pays considerable royalties to Meretec for use of the technology in Chicago and Melbourne.
Meretec’€™s Chairman Martin Young will join the CMA board following completion of the acquisition, while all key Meretec employees are to enter into long-term contracts with CMA.