Paul Mann, CEO of ASP Isotopes Inc. ASPI and Stefano Marani, CEO of Renergen Ltd. RGNNF, were recently guests on Benzinga's All-Access. The two CEOs sat down with Benzinga to discuss their recently announced merger transaction.
ASP Isotopes, which is a materials company focused on the production of isotopes for use in multiple industries, from medical diagnosis and treatments to industrial applications, entered into a merger agreement with Renergen, the South African helium and LNG producer. The all-stock deal in which Renergen shareholders will own 16% of the merged company, is designed to create a combined entity focused on critical and strategically-important materials.
ASP Isotopes, which is a materials company focused on the production of isotopes for use in multiple industries, from medical diagnosis and treatments to industrial applications, entered into a merger agreement with Renergen, the South African helium and LNG producer. The all-stock deal in which Renergen shareholders will own 16% of the merged company, is designed to create a combined entity focused on critical and strategically-important materials.
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00:00Hey, Zingers, it's Dan Leach, and I have two wonderful guests for you today.
00:05It's Paul Mann, the CEO of ASP Isoncote, and Stefano Merida, the CEO of RederGen.
00:11It's so great to be with you both.
00:12Good to be here. Thank you.
00:14Thank you for the invite.
00:15Paul, let's start with you.
00:16What is the strategic rationale behind this deal you guys have together?
00:20Listen, both companies are heavily involved in the production of critical materials.
00:24Critical materials are defined by most governments as those are strategically important to the country
00:29for really important activities, either in defense or technology or whatever.
00:34So I suppose almost every country are viewed as strategic critical materials, as is helium.
00:40We both produce these critical materials in South Africa.
00:43So our goal here is to create a powerhouse of critical materials and gases and specialist gases,
00:49particularly for the electronics market, the healthcare market, and the energy markets as well.
00:55And there's a real good overlap between the two companies.
00:57We're really excited to be working together in the future.
01:00Anytime you can get a powerhouse together, it's a good thing.
01:03Stefano, if I can go to you, I wanted to ask you about how this merger aligns with your overall business strategy.
01:08Listen, you couldn't construct a better situation on a type between two companies.
01:15You've got vertical integration and you've got horizontal integration.
01:18If you think about the customer bases, we've both got the exact same set of customer bases.
01:23You've got nuclear, you've got medical, you've got rocketry, and you've got semiconductor space.
01:29Now, all of a sudden, you've got a one-stop shop for customers.
01:32You've got complete enhancement from a customer point of view.
01:36But importantly, from a business point of view, and we can touch on this a little bit later in the interview,
01:42but you've also got a situation where you've got a competitive advantage by virtue of the fact that we both have operations in South Africa.
01:49And that's naturally going to lead to not only synergies, but cost-saving potential, which means bigger revenues, bigger profits for the group.
01:56No, of course. And as you mentioned, it's a perfect partnership.
01:59And Stefano, when you look at the benefits, what are the big benefits of this deal?
02:03So the biggest benefits are from an operations perspective in South Africa.
02:08We can centralize all operations and there'll be huge co-sharing of intellectual property.
02:15All of the engineers sitting in one room, you'll have cross-pollination of ideas.
02:19Strong understanding of the science of isotopes and nuclear.
02:23And on the other side, cryogenics.
02:24And you put all of that together, you know, there are a lot of exciting prospects for innovation.
02:30With central shared services, you've got massive potential to reduce overall cost scale right across the spectrum.
02:38The availability of clean, uninterrupted energy in South Africa is a major plus.
02:44That means that we've also got the ability to significantly reduce the overall cost for high-value products that ASP brings to the table.
02:53And then from a customer interaction point of view, imagine instead of having to go and buy from seven or eight different suppliers, one-stop shop.
03:01And you don't have to worry about supply chain interruptions because it's not a middleman who's buying from seven or eight different companies, trying to piece it all together and having to worry about shipping from all over the place.
03:11It's one producer who's producing the entire value chain from scratch.
03:17I know as a customer, I will get my product.
03:21That just makes things so much more efficient.
03:23It's awesome.
03:23Paul, let me go back to you.
03:24And I wanted to ask you about how this transaction is going to affect your combined market share and competitive position.
03:28You know, the companies basically share four primary customer types.
03:33We have the semiconductor manufacturers.
03:35We have space exploration and rocketry companies, healthcare providers, and nuclear power.
03:41So you couldn't get a better overlap in terms of customer overlap.
03:47And, you know, we at ASP is about to start building a sales force to start selling our right steps into these markets.
03:54Well, you know, Steph is based in Austin.
03:56He knows all the semiconductor companies already.
03:58We'll put our headquarters there, and we're right next to a lot of these end markets, you know, right there on our doorstep.
04:04So I think there's just so much overlap.
04:07In terms of market sharing isotopes, you know, it's only really one major competitor, and that's Rosatom, which is the Russian nuclear energy corporation.
04:17In terms of helium, you know, there's only sort of three or four companies or countries that produce helium.
04:21So, you know, this is a very concentrated market with very few suppliers in each.
04:26And what is the EBITDA target of the company, Paul?
04:28Our target is to generate over $300 million of EBITDA in 2030.
04:33And I've looked at Steph's business plan, he's looked at ours, and we think that's very achievable.
04:38Absolutely.
04:39Stefano, if I can go back to you, you know, when you look at the timeline, what is that for completing this deal?
04:43We're anticipating that factoring in regulatory processes in South Africa, we're anticipating probably somewhere around August.
04:53Right, so definitely, you know, not going to take that long to get this thing going.
04:56And, Paul, when you look at, you know, the plan to integrate the two operations of the companies, how is that plan going to come to fruition?
05:04You know, it's already going to fruition because we've been down to Velcom to visit Steph and his engineers many times.
05:11They've been to our plants many times.
05:13You know, both companies are basically in the business of separating gases in different ways.
05:17And so there's a huge amount of overlap in what our engineers do.
05:20We can share ideas of each other.
05:22You know, I met Steph in this business sense three or four years ago.
05:27We've been in contact since.
05:28And in the last six months, we started talking about putting the two companies together.
05:31So there's already been a huge amount of cross-pollination and overlap, and there'll continue to be.
05:36I'll give you a great little anecdote.
05:39We were making little modifications to the plant on the cryogenic side.
05:45And instead of a six- to eight-month lead time of waiting for critical parts from the U.S.,
05:50we literally just picked up the phone to the guys at ASPI in Pretoria in South Africa,
05:55said, listen, this is what we need.
05:57Can you guys make it?
05:58And, you know, two, three weeks later, we had the part.
06:01Just incredible stuff.
06:03And very excited for you both in this, obviously, merging of the companies.
06:07Paul Mann, the CEO of ASP Isotopes, and Stefano Marina, the CEO of Rennergen.
06:12It was an absolutely fascinating conversation.
06:14I just want to thank you both so much for joining me today.
06:17Thank you for your interest.
06:18Thank you for your interest.