Afrimat To Expand Its National Construction Materials Footprint With Acquisition Of Lafarge South Africa
Afrimat To Expand Its National Construction Materials Footprint With Acquisition Of Lafarge South Africa. Leading mid-tier mining and materials company, Afrimat has announced the acquisition of Lafarge South Africa Holdings including all its subsidiaries, subject to the fulfilment of conditions precedent relating to the receipt of customary regulatory approvals.
LSA Group, a member of the Holcim Group, is a provider of construction materials in South Africa, offering an extensive range of products to the construction and infrastructure industry, including aggregates, concrete, cement, and fly-ash. The acquisition will be housed in Afrimat’s Construction Materials division, which together with its subsidiaries (“the Afrimat Group”) supply a wide variety of aggregates and concrete-based products to the market, and the Afrimat Group, in response to customer demand, continues to focus on market and product development within this segment.
Speaking on the acquisition, Andries van Heerden, CEO of Afrimat said, “A key focus of Afrimat is our conscious operational efficiency initiatives, which are aimed at expanding volumes, reducing costs, and developing the required skill levels across all staffing categories. This exciting deal forms part of the Afrimat Group’s ongoing diversification strategy and will increase Afrimat’s offering in the construction industry, by expanding our quarry and readymix operations nationally and allowing for Afrimat to enter the cement value chain competitively.”
Afrimat is highly cash-generative and effectively debt free, allowing this acquisition to be financed largely in cash. “We are confident that this acquisition is a good use of our cash reserves, and following the purchase, the Afrimat Group’s balance sheet will remain healthy with debt levels well within our target range.” Core assets acquired consist of aggregate quarries, readymix batching plants, an integrated cement plant, cement grinding plants, cement depots, and high-quality fly-ash sources. The lime and aggregate sources are long-life assets, well-designed and all with good-quality plants and infrastructure characterising the entire portfolio being acquired.
The purchase price for the acquisition of the equity in the LSA Group is USD6 million, with an additional amount of R900 million towards repayment by or on behalf of LSA of an amount owing by LSA to the Holcim Group. The effective date of the acquisition is 10 business days after all the conditions precedent have been met. Van Heerden adds that “Operational synergies between the two businesses are substantial, considering Afrimat’s existing national footprint of aggregate quarries, readymix concrete operations and precast manufacturing operations, and we believe that the time is right to strengthen our Construction Materials division.”
He went on to add, “Afrimat operates its Construction Materials segment at a low and efficient cost, supported by ongoing efficiency projects. This philosophy will be applied to the acquisition, where we believe further efficiencies can be extracted, and build on our successful integration of similar transactions. Afrimat’s Construction Materials division contains all the expertise and strategic management execution capabilities required to ensure successful integration and expansion of our products into the infrastructure and construction sectors of South Africa.”
