Czech Chemicals Firm Draslovka Sees Rapid Growth After Chemours Unit Deal

(Bloomberg) -- Czech chemicals company Draslovka AS is creating the world's biggest producer of solid sodium cyanide, used to extract gold and silver from ore, and it expects to triple the size of the business over a decade.

An acquisition of the Mining Solutions unit from U.S.-based Chemours Co. for $521 million will create “very strong growth opportunities” for Draslovka, its Chief Executive Officer Pavel Bruzek said in an interview on Wednesday. The expansion will give the Czech supplier to the mining and agriculture industries access to cheaper raw materials and a bigger market in the U.S.

Following the transaction, the combined entity will have over $350 million in sales, of which about 75% will come from the newly acquired U.S. assets. Draslovka expects the Ebitda margin to grow to about 30% from the current about 25%, and aims to reach revenue of $1 billion in 10 years.

“We were looking for the best party on the market to acquire,” said Bruzek. “We can complement our technology and infrastructure and knowledge, and the portfolio of new products, with their knowledge of the market and their amazing access to very cheap raw materials.”

Mining Solutions is one of the largest North American producers of solid sodium cyanide. To finance the merger, the Czech company took a $348 million syndicated loan organized by JPMorgan.

“We were oversubscribed, and now we are building our reputation in the institutional financial markets, so we're really excited,” said Bruzek.

More Deals

Before the acquisition, Draslovka had production and services facilities in the Czech Republic, South Africa, Australia, New Zealand and India. In July, the company agreed to buy Sasol Ltd.'s sodium-cyanide business for 1.46 billion rand ($91 million), and Bruzek says he is “very confident” to overcome regulatory hurdles that are currently holding up that transaction and complete the deal.

Bruzek said Draslovka now has over 500 employees and is “currently looking” at some other, smaller acquisition targets, but he could not provide more details at this stage of negotiations.

Founded in 1906, Draslovka is now jointly owned by four Czech families and adds to the list of the country's industrial companies that have recently expanded to the U.S. Earlier this year, Czech firearms producer Ceska Zbrojovka Group SE bought the iconic Colt Holding Company LLC to meet rapidly growing demand in the key North American market.

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