The deal in brief

SigmaRoc (LSE:SRC) has agreed to acquire AB Dolomitas, a Lithuanian dolomite producer, with completion expected in the fourth quarter and Earnings enhancement expected in 2027.

The headline price is €110m for the core Business on a cash-free, debt-free basis, plus €8m for non-core assets, taking total consideration to €118m. Of the core price, €90m is payable in cash and €20m in new SigmaRoc shares issued to the sellers, who are subject to a 12-month lock-in.

About the company

SigmaRoc produces lime, limestone and related products for construction, steelmaking, agriculture and industry. Its Nordkalk business operates in the Nordic and Baltic regions, and it has grown through acquisitions. The group's earnings depend on construction activity and on Demand from industrial users such as steelmakers.

What SigmaRoc is buying

According to the company's announcement, Dolomitas produces around 3.5 million tonnes of dolomite a year across more than 40 product variations and runs its own road, rail and terminal logistics. It has roughly 25 years of reserves and resources, with scope to extend them.

In the year to 31 December 2025 it generated Revenue of €70m and EBITDA of €18m, a Margin above 25%. The €110m core price represents about 6.1 times that EBITDA. The margin is close to LSE:SRC's own underlying EBITDA margin of 26.1% for the first nine months of 2026, so the Acquisition should not dilute group profitability if those historical figures hold.

How it fits the group

SigmaRoc already operates in Lithuania, Latvia and Estonia through its Nordkalk business, so Dolomitas can be folded into an existing Baltic platform rather than run as a standalone outpost. Dolomite is used in construction, agriculture and industrial processes, and coverage of the deal noted its relevance to steelmaking, an end market the group has been emphasising as residential construction remains subdued.

Owning rail and terminal Assets is also relevant in a region where bulk minerals often move by train and sea, although the company has not quantified any logistics savings. Investors will want to see how quickly Dolomitas products can be sold through the group's existing Baltic.

The Balance Sheet test

Funding comes from a firmer starting point than a year ago. Covenant leverage, a lender-defined ratio, fell to 1.66 times at the half-year from 2.04 times, and net Debt declined 7.2% to £462.6m. The group has an €825m investment-grade Facility with a €300m accordion, which management has said substantially increases its acquisition capacity, although reports did not specify which source will fund the cash element.

For the nine months to 30 September, revenue rose 2.5% to £795m and underlying EBITDA increased 7.5% to £207.3m. Adding a business of Dolomitas' size would raise debt modestly while contributing earnings from completion, so the effect on Leverage should be limited. The share element also means a small increase in LSE:SRC's share count.

Risks and limitations

Integration carries execution risk, and historical EBITDA may not be repeated if Baltic construction or steel demand weakens. Energy costs and the wider European industrial outlook remain broader risks for the group.

The price in detail

The core price of €110m, plus €8m for non-core assets, gives total consideration of €118m. Of the core price, €90m is cash and €20m is in new shares, so about 82% is paid in cash and 18% in shares. The sellers' 12-month lock-in on the shares means they cannot sell them for a year. Revenue of €70m and EBITDA of €18m imply a margin of about 25.7%, and the price of €110m is about 1.6 times revenue.

What the business does

Output of around 3.5 million tonnes of dolomite a year across more than 40 product variations suggests a varied product range. Rail and terminal logistics owned by the business matter because dolomite is heavy and low in value per tonne, so transport costs are a large part of the delivered price. Having 25 years of reserves provides a long period of Supply at current rates, and the potential to extend them adds to that.

Balance sheet

Net debt of £462.6m, down 7.2%, implies a figure of about £498.5m before. Covenant leverage of 1.66 times, down from 2.04 times, means that the lenders' ratio improved by about 0.38 turns. The cash element of €90m is about £77m at recent exchange rates, which is about 17% of net debt. The €825m facility with a €300m accordion provides capacity, and the margin in the facility terms is higher for covenant leverage above certain levels, which is why the ratio matters.

Group context

Underlying EBITDA margin of 26.1% for the first nine months of 2026 is close to Dolomitas's margin of over 25%, so the margins are similar. The group's focus on steelmaking, where dolomite is used, is stated as a response to subdued residential construction. The expansion of the Baltic platform, where it already operates in Lithuania, Latvia and Estonia, concentrates the group's presence in a region where it can share sales and logistics.

Why dolomite and logistics matter

Dolomite is a heavy bulk mineral, so the cost of moving it can be a large share of its delivered price. A producer that owns its rail and terminal assets has more control over those costs and can reach customers further away. For a group that already operates in the Baltic region, a business with its own logistics offers a way to serve a wider area from fewer sites.

The 40-plus product variations indicate that the business sells to many kinds of customers, from construction and agriculture to industrial users. A range of products tends to make revenue less dependent on a single end market, although the company has noted that steelmaking is an area it is emphasising.

The group's statement that the deal should enhance earnings in 2027 means it expects the profit contributed by the business to exceed the cost of financing it. At a price of about 6.1 times EBITDA, the purchase is cheaper than the multiple at which many listed building materials companies are valued, which is the basis for expecting enhancement.

Completion in the fourth quarter depends on the usual regulatory approvals. The cash element of €90m will be drawn from the group's facilities, and the shares issued to the sellers add to the total number in issue, a small increase relative to the group's size.

The sellers' 12-month lock-in is a feature that discourages early selling of the new shares and aligns the sellers with the group's performance after the deal. Investors will look at the integration plan and at the first results in which the business is included.

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