Afrimat has announced that the Competition Tribunal has finally granted approval for the Lafarge acquisition. All other regulatory authority approvals have been granted.
In a Stock Exchange News Service (SENS) announcement, CEO Andries van Heerden indicated that this exciting deal forms part of the Afrimat Group’s ongoing diversification strategy. “It will increase Afrimat’s offering in the construction materials space by expanding the group’s quarry and ready-mix operations nationally. Additionally, access to the fly ash operations provides a foothold into the cement extender market. The grinding plant will allow Afrimat to grind various materials as value-added products for our current and new customers, while the cement kilns allow the group to enter the cement value chain competitively.”
For this acquisition, Afrimat entered into a share purchase agreement with a Holcim Group subsidiary, Caricement B.V., in which Afrimat will acquire 100% of the issued share capital of Lafarge South Africa Holdings Proprietary Limited. The acquisition has been structured as a locked box transaction, effective 31 December 2022, and the purchase consideration payable is in the amount of US$6-million. In addition to this, Afrimat agreed to repay or procure the repayment of the loan amounts owed equating to R900-million.
All conditions have now been met, including the requisite Competition Authorities, with the Minister of Mineral Resources and Energy of South Africa having approved the acquisition in terms of section 11 of the Mineral and Petroleum Resources Development Act No. 28 of 2002 and the Financial Surveillance Department of the South African Reserve Bank approving the acquisition in terms of the Exchange Control Regulations.
Van Heerden says, “We believe our efficiency drives and breadth of marketing in the construction materials industry will ensure a contribution at an operating profit level, further diversifying the Group’s profitability and ensuring long-term sustainability.”
The Lafarge acquisition will be integrated into the Construction Materials segment of Afrimat, with van Heerden adding that, “the time is perfect for Afrimat to return to its roots of quarrying and aggerates to support long-term diversified sustainability across the group.”
In the most recent interim results announcement, the Construction Materials segment reported a significant improvement in operating profit, which increased by 113,5%, reaching R156,1-million from the previous comparable period of R73,1-million. Van Heerden explains this was due to efficiency improvement initiatives which proved to be successful across the segment. Increased activity in road and rail projects resulted in stronger demand for products used in roadbuilding, rail and infrastructure projects.
Van Heerden says, “We have appointed our chief financial officer, Pieter de Wit, as the full-time Integration Manager. He will, together with experienced leadership and an integration team, focus on ensuring this process is as transparent and uncomplicated as possible. We will ensure that we utilise the skills within both Afrimat and Lafarge SA during the integration process to optimise efficiencies, productivity, and profitability.”
Van Heerden concludes by saying, “We trust that the employees, suppliers, and customers who are joining us because of the acquisition will have a successful journey with Afrimat, and we welcome them as part of our extended organisation”.
