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LKAB Minerals to acquire Francis Flower

Leif Bostrom

Acquisition set to form strong UK industrial minerals supplier and strengthen supply of construction materials

LKAB Minerals have today announced that, subject to merger clearance, they are to acquire full ownership of Francis Flower for an undisclosed cash sum.

Francis Flower, who sell around 1.3 million tonnes of mineral products per annum at a value close to £70 million, employ 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 Minerals Ltd in the UK have a similar size business across four sites and employ around 160 persons. Their main operations are the processing and marketing of minerals primarily for the building, construction, polymer, coating, refractory and foundry industries.

In 2017, LKAB had sales of SEK23 billion (c.£2 billion), of which LKAB Minerals reported sales of SEK2.4 billion (c.£210 million). The acquisition of Francis Flower is expected to bring a significant addition to the sales turnover in the company’s industrial minerals segment.

‘Francis Flower will bring a portfolio of sustainable products that will strengthen LKAB Minerals’ position as a supplier for the building and construction industry,’ commented LKAB Minerals’ European chief executive officer, 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 recycle blast-furnace slag from the steel industry for the production of ground granulated blast-furnace slag (ggbs) – a sustainable product that can replace 70% of Portland cement in a concrete mix, delivering decreased CO2 emissions.’

Francis Flower is a family-owned business whose main shareholder is current chairman and chief executive officer 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, to support a seamless continuation of the business.

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.

Mr Willmott commented: ‘LKAB Minerals are in a unique position to further develop Francis Flower across all their 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 their parent’s iron ore business will present much opportunity to Francis Flower in their 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.’

Mr Wilson said: ‘They are a strategic fit for LKAB Minerals. Francis Flower have a strong entrepreneurial spirit and focus on sustainability, which is a critical success factor that is growing in importance. They have modern state-of-the-art production facilities and a dedicated team of mineral processing experts and industry specialists with a broad network of contacts in the end-user segments.

‘I believe we will be able to realize synergies that strengthen both our operations, increase cross-selling and improve service to our combined customer base in a very positive way. I look forward to meeting with all customers and future co-workers in the coming weeks and months.’

Leif Boström (pictured), senior vice-president for the Special Products Division within LKAB and chief executive officer of the LKAB Minerals group, added: ‘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. We also invest in new projects, such as upgrading mine waste to phosphorus and rare earth metals, and finally we have an active acquisition strategy.

‘Francis Flower are a perfect fit for us, and importantly we believe we can add value to that business as an owner, helping to grow it further. This will strengthen LKAB Minerals’ offering to the building and construction industries. An increased presence in the industry also has the potential to increase sales of our existing products.’

Implementation of the agreement is subject to Austrian merger clearance but both parties are confident that this process will be completed within 4–6 weeks.

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