First publishedon www.AggBusiness.com
LKAB Minerals says its acquistion of Francis Flower will strengthen the supply of UK construction materials
LKAB Minerals is to acquire UK industrial minerals group Francis Flower for an undisclosed sum.
Sweden-based industrial minerals group LKAB says the cash acqusition, which is subject to merger clearance, will see it take full ownership of Francis Flower and create a strong UK industrial minerals supplier that will strengthen supply of construction materials.
Francis Flower's products include ground granulated blast furnace slag (GGBS), which is produced by quenching molten iron slag (a by-product of iron and steel-making) from a blast furnace in water or steam, to produce a glassy, granular product that is then dried and ground into a fine powder. It replaces up to 70% of the Portland Cement in concrete, and is claimed to significantly reduce CO2-emissions. Francis Flower produces GGBS in Scunthorpe on the grounds of British Steel, upgrading their blast furnace slag.
LKAB is a significant supplier of highly upgraded iron ore products to British Steel. Francis Flower says it is the second largest supplier of GGBS in the UK.
"Francis Flower will bring a portfolio of sustainable products that will strengthen LKAB Minerals position as a supplier for the Building and Construction industry," says LKAB Minerals European CEO Darren Wilson. "We also view this as a form of circular economy as there is a strong link to LKAB's iron ore business."
Francis Flower has annual sales of approximately 1.3 million tonnes of mineral products at a value of nearly £70 million (mostly in the UK), and employs 130 people across four sites in England; Scunthorpe, Wicken, Gurney Slade and Runcorn. The company has a niche in recycled and by-stream product upgrades as well as high quality fillers for several end-user applications.
LKAB's UK operation, LKAB Minerals Ltd, has a similar size business across four sites and employs around 160 people. The main operations are processing and marketing of minerals, primarily for the building, construction, polymer, Coating, refractory and foundry industries.
In 2017, the complete LKAB group had sales of £2 billion (SEK 23bn) of which LKAB Minerals reported sales of £210m (SEK2.4bn). LKAB says the acquisition of Francis Flower will bring a significant addition to the sales turnover in its industrial minerals segment.
Francis Flower is a family-owned business, and the main shareholder is current chairman and CEO Adrian Willmott. Upon completion of the sale he will resign his position in the business but remain available in a consultancy capacity during an integration phase. The company will be integrated into LKAB Minerals’ existing UK business under the leadership of Darren Wilson who manages the UK and European business within LKAB Minerals.
Willmott comments: “LKAB Minerals are in a unique position to further develop Francis Flower across all its product lines. I have the utmost confidence that they will do so using the same core values we have adopted with our customers, suppliers and employees throughout our history. There is no doubt that LKAB Minerals’ links to its parent’s iron ore business will present much opportunity to Francis Flower in its next chapter, combine this with the ambitions of Darren Wilson and Leif Boström and Francis Flower is going to continue to be an exciting place to be.”
Leif Boström, senior vice president for the special products division in LKAB and CEO of LKAB Minerals group, commented: “We have an ambition of growing the industrial minerals business significantly over time, to balance LKAB’s growing iron ore production. We are doing this through organic growth, meaning we increase sales of our existing product portfolio."
The agreement is subject to Austrian merger clearance, but the two companies say they are confident the merger control process will be completed within 4-6 weeks.