Acquisition of SG Technologies Group
Limited Moves Neo Further up the Value Chain and Expands its
Specialty Manufacturing Footprint in Europe to Better Support Rapidly Growing
Magnet Demand from the Electric Vehicles, Electronics, and Clean
Energy Industries
TORONTO, April 18,
2023 /CNW/ - Neo Performance Materials Inc.
("Neo", the "Company") (TSX: NEO) is pleased to
announce that it has agreed to acquire the controlling interest in
SG Technologies Group Limited ("SGTec"), one of Europe's leading advanced, specialty
manufacturers of rare-earth-based and other high-performance
magnets for industrial and commercial markets. The purchase is
expected to further expand Neo's rare earth processing and magnet
manufacturing footprint in Europe
in strategic alignment with the Company's plans to launch
production in 2025 of sintered rare earth magnet manufacturing in
Estonia for the electric vehicle,
electronics, energy-saving specialized motor applications markets,
and other high-growth-potential nascent technology applications
that are critical to the current global energy transition. The
acquisition is expected to be completed by April 21, 2023.
With over 200 employees working just outside of London, SGTec was first established in the UK
in the 1940s as an aluminum-nickel-cobalt permanent magnet
manufacturer. Today, SGTec produces a variety of high-performance
magnets and magnetic assemblies for some of the world's leading
brands in electric and hybrid vehicles, multi-fuel and medium-duty
engines, hydrogen fuel cell vehicles, off-highway fuel systems,
automotive systems, and consumer electronics. It is recognized as a
leader in the production of fully dense bonded neodymium-iron-boron
("NdFeB") magnets, soft magnetic composites (used in high-speed
solenoids and electric motor applications), and other
high-performance magnets. For example, non-rare earth magnets made
by SGTec for automotive fuel injectors are helping vehicle
manufacturers prepare to meet new and more stringent vehicle air
emissions standards under the proposed Euro
7 standards.
Neo will acquire a 90% interest of SGTec with an initial payment
of 10.8M GBP ($13.4M USD) plus future earn-out considerations
of between 0 and 5.4M GBP
($6.7M USD) based on Adjusted EBITDA
performance over the SGTec's fiscal years 2024 through 2026.
The remaining 10% of SGTec will continue to be owned by members of
SGTec's senior management team.
More information on SGTec can be seen here:
https://www.sgtec.com
"I am very pleased to welcome the many outstanding engineers,
scientists, and professionals at SGTec into Neo's global team,
whose decades of experience, know-how, and leading-edge R&D
will unlock unique synergies working as a unit with our world-class
magnetics division," said Constantine
Karayannopoulos, CEO and Director of Neo. "This combination
is highly complementary to Neo as we continue to move up the value
stream. It expands our magnet manufacturing and product
development footprint in Europe
and will bring us in closer proximity to key customers in
Europe, which is expected to
facilitate more efficient production supply chains. Finally,
this combination will help us increase our exposure to new markets
and high-growth applications."
"Neo Magnequench has served as a proud supplier of magnetic
powders to SGTec for more than two decades, and we recognize the
significant value and growth potential that SGTec brings to Neo
Magnequench," added Greg Kroll, Neo
Executive Vice President and head of the Company's Magnequench
business unit. "SGTec is known in the industry for its decades-long
uninterrupted track record of R&D commercialization and
reputation for its exceptional product quality, its technical skill
and ability to meet extraordinarily challenging tolerances and
performance specifications, and its creativity and product
innovation. The SGTec team will very nicely augment the skill sets
of our teams at Magnequench and help us to accelerate our effort to
serve rapidly growing markets across Europe and elsewhere."
Neo continues to advance its previously announced plans to
construct and operate a sintered NdFeB magnet manufacturing
facility outside of Narva, Estonia, conveniently situated near Neo's
existing rare earth separations and rare metal production facility
in Sillamäe, Estonia. Neo expects
to launch Phase 1 production of 2,000 tonnes / year of NdFeB magnet
block in Estonia starting in 2025.
As commercial discussions with magnet customers indicate
significantly higher demand than Neo's Phase 1 production plans,
Neo intends to expand production to Phase 2 levels of 5,000+
tonnes/ year thereafter. The Company plans to break ground on the
new plant this year.
About Neo Performance
Materials
Neo manufactures the building blocks of many modern technologies
that enhance efficiency and sustainability. Neo's advanced
industrial materials - magnetic powders and magnets, specialty
chemicals, metals, and alloys - are critical to the performance of
many everyday products and emerging technologies. Neo's products
help to deliver the technologies of tomorrow to consumers today.
The business of Neo is organized along three segments: Magnequench,
Chemicals & Oxides and Rare Metals. Neo is headquartered in
Toronto, Ontario, Canada; with
corporate offices in Greenwood Village,
Colorado, United States;
Singapore; and Beijing, China. Neo has a global platform that
includes 9 manufacturing facilities located in China, the United
States, Germany,
Canada, Estonia, and Thailand, as well as one dedicated research
and development centre in Singapore. For more information, please visit
www.neomaterials.com.
Cautionary Statements Regarding
Forward-Looking Statements
This news release contains "forward-looking information" within
the meaning of applicable securities laws in Canada. Forward-looking information may relate
to future events or future performance of Neo. All statements in
this release, other than statements of historical facts, with
respect to Neo's objectives and goals, as well as statements with
respect to its beliefs, plans, objectives, expectations,
anticipations, estimates, and intentions, are forward-looking
information. Often, but not always, forward-looking information can
be identified by the use of words such as "plans", "expects", "is
expected", "budget", "scheduled", "estimates", "continues",
"forecasts", "projects", "predicts", "intends", "anticipates" or
"believes", or variations of, or the negatives of, such words and
phrases, or state that certain actions, events or results "may",
"could", "would", "should", "might" or "will" be taken, occur or be
achieved. This information involves known and unknown risks,
uncertainties and other factors that may cause actual results or
events to differ materially from those anticipated in such
forward-looking information. Neo believes the expectations
reflected in such forward-looking information are reasonable, but
no assurance can be given that these expectations will prove to be
correct and such forward-looking information included in this
discussion and analysis should not be unduly relied upon. For more
information on Neo, investors should review Neo's continuous
disclosure filings that are available under Neo's profile at
www.sedar.com.
SOURCE Neo Performance Materials, Inc.