Swedish industrial group set to acquire mineral products business

Swedish industrial group LKAB Minerals is set to acquire the specialist mineral services provider, Francis Flower.

Francis Flower has annual sales of approximately 1.3 million tonnes of mineral products at a value of close to £70m.

The company employs 130 people across four sites in Scunthorpe, Wicken, Gurney Slade and Runcorn.

LKAB Minerals’ UK business is similar in size as it also covers 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.

Darren Wilson, European CEO of  LKAB Minerals, said: “Francis Flower will bring a portfolio of sustainable products that will strengthen LKAB Minerals position as a supplier for the Building and Construction industry.

“We also view this as a form of circular economy as there is a strong link to LKAB’s iron ore business. Francis Flower recycles blast furnace slag from the steel industry for 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.”

In 2017, LKAB had sales of £2bn of which LKAB Minerals reported sales of £210m. The acquisition of Francis Flower will bring a significant addition to the sales turnover in the Industrial Minerals segment.

Adrian Willmott, the current Chairman and CEO of Franics Flower, will resign from his position upon completion of the sale and remain available in a consultancy capacity during the integration phase.

The family-run company will be integrated into LKAB Minerals’ existing UK business.

Willmott said: “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, 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 is a perfect fit for us, and importantly we believe we can add value to that business as an owner, helping to grow that further.”

The combined EBITDA of the two entities being acquired (Francis Flower (Northern) Limited and Gurney Slade Lime & Stone Co. Limited) per Companies House is £10.4m.

KPMG Corporate Finance acted as lead advisors to the shareholders of Francis Flower on the transaction, with TLT providing legal advice and KPMG Tax providing tax advice.