Issue: Dec 2006


Eikeland Consortium to Acquire Meridian Technologies



by Steve Barclay

Meridian Technologies, the world's largest magnesium die casting company, is to be acquired for an enterprise value of CAD$200 million by a consortium of investors led by the Norwegian entrepreneur Jostein Eikeland through his Swiss holding company Estatia AG. Current owners of Meridian - Teksid SpA of Italy (a subsidiary of Fiat Group) and Norsk Hydro ASA - have agreed to sell 100% of the equity of the company to the consortium in an all cash transaction financed through a combination of debt and equity.

The acquiring consortium comprises Estatia AG (a Swiss holding company controlled by Mr. Eikeland), and a collection of investors led and arranged by Landsbanki of Iceland, with debt financing underwritten by GE Capital Commercial Finance and Landsbanki. Landsbanki is the Lead Financial Advisor to the acquirer with BZ Bank and Straumur Burdaras as co-advisors.

With its headquarters and Global Technology Centre headquartered out of Ontario, Canada, Meridian has the largest market share in the magnesium die casting market. It is also the only magnesium die caster with global manufacturing, engineering and sales operations in North America, Europe and Asia. Key customers include General Motors, Ford, DaimlerChrysler, Fiat, Opel, VW, LandRover and BMW.

The acquisition of Meridian Technologies substantially increases the interests of Mr. Eikeland in magnesium die casting operations. Mr. Eikeland already has a 28% equity holding in Tonsberg Magnesium Group International (TMGI, a Scandinavian magnesium die casting company that is quoted on the Stockholm Nordic Growth Market (NGM Equity)).

"Magnesium is set to be the metal of our times. It is far lighter than steel and aluminum, with the best strength to weight ratio of all three metals. With high oil prices set to remain, magnesium can significantly reduce the weight of, and hence improve the fuel economy of vehicles"
explained Jostein Eikeland, Chairman of Estatia AG. "With a cost advantage over aluminum, magnesium use in the automotive industry continues to grow over 10% per year. This offers a tremendous opportunity for us to build a global manufacturing base and brand that will be synonymous with the adoption of this metal throughout components manufacturing."

Magnesium is the lightest structural material (1.8g/cm3) and the 8th most abundant element in the earth's crust. It is produced from sea water, brines and magnesium-bearing minerals which offer unlimited reserves. Annual production was 350,000 metric tons in 1990 but had grown to 500,000 metric tons in 2005.

Magnesium components are widely used in automotive and other industries as they are 75% lighter than steel and 33% lighter than aluminum, with a high impact resistance. The cost of magnesium has decreased in recent years as supply of the raw material has increased and the current price stands below that of aluminum. The low cost, high strength to weight ratio and the increasing technical ability to cast complex magnesium components has led to its mainstream use in the automotive industry where its use is growing over 10% per year.

Meridian Technologies is a technology leader in the development of new magnesium applications to reduce vehicle weight and increase fuel economy, handling and performance. With six manufacturing facilities in five countries, and its Global Technology Center located in Strathroy, Ontario, Meridian is the only Magnesium die caster with global manufacturing, engineering and business development operations.

Estatia AG was created in 2004 as the holding company and acquisition vehicle for Jostein Eikeland and associates. Established in Switzerland, Estatia has built a strategic investment base of companies which includes technology and industrial companies in North America and Europe.

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