Industrial Reporter
CONSTRUCTION and building materials retailer Iliad Africa announced it is buying Corpbuild as a going concern from Corpcapital for R254m.
The acquisition of the building materials group would double Iliad's turnover to R2bn a year.
This deal would see Iliad taking about 8% of SA's R23bn building materials market.
Iliad CEO Ralph Patmore said the acquisition complimented the businesses of his group, as the product range of both groups mirrored each other and there was no geographic overlap.
He said the acquisition provided Iliad with "substantially expanded geographic coverage" in the building materials division and gave it critical mass in its ironmongery division.
Ironmongery contributed 4% to turnover, but after the acquisition it would make up 18%.
The number of building material outlets would rise from three to 19, and the number of ironmongery and hardware stores would rise from five to 13.
The purchase consideration of R254m would be settled with a R125m cash component and 46million ordinary shares that would be issued to Corpcapital shareholders.
From the cash component of the deal, the group decided to raise R50m debt and to issue 25-million shares to the institutions backing the deal.
Patmore did not think there would be any difficulty in repaying the R50m loan, and said it would take two to three years to achieve this.
He said it also helped that the businesses of Corpbuild generated strong cash flows.
He said the acquisition would see Iliad's debt to equity ratio at about 25%. This put the group in a strong position to make further acquisitions.
The deal would double Iliad's market capitalisation to more than R450m.
Patmore said this would see the group improve its institutional base and create liquidity in its shares.
The acquisition is not a done deal yet because it still needs the approval of the JSE Securities Exchange SA and the competition authorities.
In its results for the half-year to June this year, turnover increased 12% to R379,1m while trading profit rose 27% to R30,5m.
Iliad's share price closed unchanged at 328c yesterday, with 57826 shares traded in 45 deals.
Aug 08 2003 07:21:49:000AM Larry Claasen Business Day 1st Edition
Publisher: Business Day
Source: Business Day
Iliad Africa to buy Corpbuild for R254m.
Posted On Friday, 08 August 2003 02:00 Published by eProperty News
Deal will double its turnover.
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