Shinagawa Refractories announces the next stage of its global expansion with the acquisition of Gouda Refractories Group

Shinagawa Refractories Co., Ltd on October 25, 2024, announces that it has purchased all the issued share capital of Gouda Refractories Group B.V., a Netherlands-based leading manufacturer of (high-) alumina refractories and provider of refractory services, from Andus Group B.V.. The acquisition was completed on October 24, 2024.

Acquisition rationale

In its 6th Mid-Term Management Plan, Shinagawa set out the key strategic priorities for FY2024 to FY2026 as it works towards the realisation of its Vision 2030. The strategic priorities identified for the 6th Mid-Term Management Plan included:

• Further sector-driven business expansion.
• Production optimisation in Japan.
• Acceleration of global expansion.
• Further promotion of sustainability initiatives.

Following the acquisition of Saint-Gobain's refractory business in Brazil and wear-resistant ceramics business in the U.S. in December 2022 and the expansion of its Indonesian business announced in March of this year, Shinagawa intends to continue to deepen cooperation with local partners overseas and strengthen its business through strategic and synergistic international M&A and has been looking for attractive opportunities to acquire businesses which will help turbocharge both its overseas business expansion and its expansion into new sectors of the refractories market. The acquisition of Gouda represents a perfect fit with Shinagawa's strategy.

Gouda produces shaped and unshaped refractories at two production sites in the Netherlands and has service sites in the Netherlands, Belgium, Germany, and Sweden for installation and on-site operations. The production division provides white refractory solutions for the non-ferrous metals (aluminium, zinc, and copper), petrochemical, energy, and steel industries, while the service division provides solutions mainly for the petrochemical, energy industries and (secondary) aluminium.

In addition to providing Shinagawa with state-of-the-art manufacturing for premium white refractories and high-value service capabilities in Europe, the acquisition will also allow Shinagawa to benefit from Gouda's well-established customer and distribution network in Europe, the Middle East and Africa, offering an attractive opportunity to accelerate Shinagawa's global expansion further.

In the petrochemical sector, Gouda is one of the few manufacturers with all the major certifications of global petrochemical producers and technology providers. Therefore, it represents a perfect opportunity for Shinagawa to establish a strong position in this attractive market. In the petrochemical and energy sectors, Gouda is an important supplier of refractory materials that support the energy transition and other sustainability goals, including refractories for the waste-to-energy market and technologies to improve efficiency and reduce emissions at petrochemical and oil refining operations.

Gouda's product line-up and service capabilities for the petrochemical, energy, and non-ferrous metals industries are highly complementary and additive to Shinagawa's existing product line-up and customer base. Combining these products and services with Shinagawa's existing business will offer substantial synergy potential through the promotion of cross-selling, further geographic expansion through each firm's sales network, and technical collaboration opportunities taking advantage of the combination of R&D capabilities, product portfolio, and operational know-how.

In combination with Shinagawa, Gouda will be enabled to jointly expand its services network in North-West Europe and its offering of refractory linings to customers in the Middle East, Southeast Asia, and the Americas. Together with Shinagawa, Gouda will be able to serve its local customer base even better and ensure the stability of the supply of high-grade refractory materials for customers' critical production equipment and installations.

Gouda's management is excited about its new future together with Shinagawa. This transaction represents an important step forward for the company, its employees, and its customers.

This acquisition will greatly accelerate the realisation of Shinagawa's Vision 2030 in all aspects, including globalisation, expansion into new segments of the refractories industry, and sustainability.

The combination with Gouda will further enhance Shinagawa's ability to generate stable, growing cash flows, realise further corporate value enhancement through continuous investment in growth, and maintain a solid balance sheet.

Overview of Gouda

Headquartered in the City of Gouda in the Netherlands, Gouda is a leading global supplier of high-quality white refractory solutions and a provider of refractory installation and services in North-West Europe. Founded in 1901 and boasting over 120 years of history, Gouda is one of the few full-suite white refractory product and service providers covering a variety of end markets, including non-ferrous metals (including aluminium), petrochemicals, waste-to-energy, iron and steel, cement, and paper.

Gouda's manufacturing operations are carried out at two highly efficient state-of-the-art manufacturing facilities in the Netherlands. The plant at Gouda (where the head office is also located) produces bricks and pre-cast shapes, whilst an additional facility at Geldermalsen produces unshaped materials. Products manufactured at these two facilities are sold to a global customer base across Europe, the Middle East, Asia Pacific, the Americas, and Africa.

Gouda's services division operates via local subsidiaries in the Netherlands, Belgium, Germany, and Sweden and serves customers all over Europe. These local subsidiaries provide a variety of services to refractory customers, including installation, maintenance, dry-out activities, troubleshooting, problem-solving, and training.

Employing 236 full-time employees, Gouda benefits from a talented, experienced, and knowledgeable management team and a highly skilled workforce with an outstanding commitment and track record for quality and safety. We look forward to welcoming the management and employees to Shinagawa and supporting their further growth and development.

Transaction overview

The transaction is being implemented by purchasing 100 per cent of Gouda's issued share capital from its parent company, Andus Group B.V.

The transaction is not subject to regulatory clearances and has been approved by Gouda's works council. It was signed and closed on October 24.

Houlihan Lokey (Financial Advisor) and Stibbe (Legal Advisor) assisted Shinagawa in this acquisition.