Molycorp will acquire Neo Materials for approximately CDN $1.3 billion. This will create one of the most technologically advanced, vertically integrated rare earth companies in the world.
"This transaction will link two unique companies - one with a world-class, high-quality resource, and the other with world-class rare earth product design and processing capabilities," said Mark A. Smith, Molycorp's President and Chief Executive Officer. "Neo Materials is recognized throughout the industry for its exceptionally high-quality production and processing capabilities, its patented technology platform, and its ability to consistently meet demanding customer specifications. With this combination, Molycorp will be in a unique position to enhance our time to market and provide new global customer segments with rare earth metals, oxides, and alloy powders that are unmatched today. We see significant opportunities for growth as well as powerful synergies through this transaction."
Molycorp intends to finance the majority of the cash portion of the consideration and has obtained a committed financing facility from Morgan Stanley and Credit Suisse. Permanent financing is expected to include long-term debt, existing cash on hand of the combined company, and the proceeds from any equity issuances.
The combination of Molycorp and Neo Materials will expand Molycorp's geographic footprint across 11 countries and provide leading product development, research, and sales capabilities. This transaction will give Molycorp greater exposure to the world's largest and fastest-growing rare earth consuming nation - China - which now comprises about 70% of global rare earth consumption.
In 2010 and 2011, Neo Materials' sales to China and Japan, collectively, accounted for approximately 68 percent and 64 percent of sales, respectively.
The combination will expand Molycorp's technology portfolio to include production of magnetic powders, and rare metals including gallium, indium and rhenium, as well as zirconium oxide. This will enable Molycorp to produce and market materials that are integral to a wide variety of strategic technologies, including advanced electronics, thin film photovoltaics, LEDs, flat screens, super alloys, catalytic converters, mobile and smart phones, magnets, batteries.
The addition of Neo Materials' expertise will also provide entry for Molycorp into customer segments requiring value added, rare earth and rare metal production capabilities - up to 99.99999% purity for some elements.
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