Afrimat acquires Clinker Group
JSE materials supplier Afrimat (AFT) has entered into an agreement to acquire 100% of the issued ordinary share capital of SA Block and its 100% owned subsidiary Clinker Supplies for R123.5 million.
The sellers included Aureos Southern Africa Fund LLC, Hans-Elisabeth Pfeffer, S.A. Block Employees Trust and Karl-Anton Pfeffer.
The parties to the transaction highlighted complementary and supplementary strengths between Afrimat and the Clinker Group by way of rationale for the transaction. "Leveraging these combined strengths will result in new revenue opportunities as well as increased profitability, specifically through product development and a focused marketing strategy," Afrimat said.
The Clinker Group currently returned profit after tax of approximately R30.0 million per annum which would equate to a return on equity on Afrimat's investment of approximately 24% per annum.
Afrimat CEO Andries van Heerden said: "The acquisition is in line with our strategy of seeking out new avenues for growth and presents us with a unique opportunity to generate further revenue opportunities through new product development as well as a refined, focused marketing strategy." The Clinker Supplies group has a profit after tax of approximately R30.0 million, which would equate to a return on equity for Afrimat of approximately 24% per annum.
The acquisition also provided Afrimat with a hedge against the volatile cyclicality associated with the aggregates industry. "Due to clinker's distinct characteristics, which are difficult to substitute, it has proven resistant to market fluctuations," van Heerden said.
The full activities of the Clinker Supplies group included the extraction of clinker raw material from various stock piles and the processing thereof into products of various specifications, primarily for use in the concrete manufacturing industry. Clinker dumps had a life span of 10 years.
Key operations were located close to Vereeniging and Sasolburg with support services based in Alrode and the group supplied customers in the wider Gauteng market and adjacent northern provinces. It was situated close to the recently acquired Glen Douglas Mine, creating exciting opportunities for synergy, Afrimat said. The processing and manufacturing plants were well established and maintained, it added.
The effective date of the acquisition would be the last day of the month in which all conditions precedent were met. The purchase price would be settled by a combination of cash in the amount of R95 million and Afrimat ordinary shares, currently held as treasury shares to the value of R28.5 million.
The number of Afrimat ordinary shares would be determined with reference to the 30 trading days Volume Weighted Average Price of Afrimat's ordinary shares on 9 December 2011 being R4.35 per share.