ad hoc

SKW Metallurgie acquires ESM Group

Unterneukirchen (Germany), July 12, 2007. SKW Stahl-Metallurgie Holding AG is to acquire a 100% interest from Platinum Equity, LLC in US-based ESM Group Inc. which is headquartered in Amherst, NY, USA. ESM is the clear market leader in North America’s hot metal desulphurisation field. This makes SKW Metallurgie the global market leader in this segment, allowing it to venture into new dimensions thanks to an acquired turnover volume of around USD 150 million p.a. The cash component of the purchase price will amount to around USD 60 million. In addition, a working capital loan of around USD 15 million will be assumed. The final purchase price will be determined at the closing of the transaction, and will be financed from SKW Metallurgie’s existing liquidity and by debt. Due to ESM’s above-average profitability which is at an EBITDA margin of around 7% – 8%, a significant earnings increase is already expected in the year of acquisition. The company will be first consolidated after the transaction is closed, expected from the middle to the end of August 2007. The transaction is subject to the approval of the relevant antitrust authorities. ESM’s integration is facilitated by the fact that SKW Metallurgie and ESM have been closely linked in business for many years. Along with expanding the market leadership and backward integration in the value chain by ensuring raw material access to the magnesium mixtures, the transaction also offers extensive cost synergies through the joint use of sites in North America which is more efficient, and in purchasing raw materials. The ESM acquisition also enables significantly improved access to the world regions and sales markets that SKW Metallurgie declares to be growth and expansion markets, such as Eastern Europe and South America, as well as higher-margin service activities along the value chain.

SKW Metallurgie plans to adjust its turnover and earnings guidance for this financial year, as well as for the medium-term, when it announces the figures for Q3 – in which ESM will then be first consolidated – on 12 November 2007. The first indications for Q2 2007 show that business continues to be strong.