Dyno Nobel acquires shares in Fabchem China

Dyno Nobel has acquired 29.9% of the ordinary shares in Fabchem China, an explosives company listed on the Singapore stock exchange. The total consideration of up to S$0.70 per Fabchem share equates to $31.8m which includes an up front payment of S$0.52 per share, an additional S$0.13 per share payable upon achieving profit hurdles in 2008, and S$0.05 per share payable upon Fabchem obtaining an export license.

Following the acquisition, Dyno Nobel plans to work closely with Fabchem management and board to enhance the successful growth of the company in China. As part of this process, Dyno Nobel will nominate two representatives to Fabchem’s Board of Directors. Additionally, Dyno Nobel will have a senior manager seconded to Fabchem, reporting to the Managing Director of Fabchem, Sun Bowen.

Dyno Nobel CEO, Peter Richards, said, “This strategic acquisition is particularly significant because it now meets our internal financial criteria and gains us the best possible access to the growing Chinese market. China is a large, high growth market with industry consolidation opportunities being driven by a government mandate. We targeted Fabchem because of the quality of its businesses, overall safety record, its management and its reputation and understanding of the Chinese market. Fabchem is a leading initiation systems supplier in China, has a scaleable and profitable business with growth potential, and strong government relationships at both the local and national level. By partnering with a local company we believe we can best leverage the existing Fabchem business by sharing our strengths in day-to-day explosives management, technology and export contracts.”

Dyno Nobel is a leading supplier of industrial explosives and blasting services to the mining, quarrying, seismic and construction industries. It is the market leader in North America – the largest explosives market in the world – and the second largest supplier in Australia – the third largest explosives market in the world. Dyno Nobel traces its roots back to Alfred Nobel, the inventor of the detonator and dynamite, and, since the 1920s, has focused on the commercial development of industrial explosives. The company has 36 manufacturing facilities in Australia, Canada, the US and Mexico.

Fabchem China is one of the leading manufacturers of commercial explosive devices in China. The group’s principal business activity is in the production and sale of commercial explosives products (comprised of explosive devices, initiators and detonators) both under its own brand name, Yinguang, and those of third parties. It also provides after-sales services to its customers such as technical assistance related to the detonating activities. The Group’s products are mainly used by the mining, hydroelectric and infrastructure construction industries for activities such as coal mining, oil and gas exploration, construction of hydroelectric dams, roads and railways and large construction projects.