Cape Town - Terrafin Holdings, the recently listed development capital company specialising in distribution and logistical management services, yesterday clinched a R160 million transaction to acquire Sabot Management, a complementary company with a strong foothold in sub-Saharan Africa.
This is Terrafin's third acquisition after deals late last year with Alentia Management and Consulting Services and Multifold Investments, a Gauteng-based logistics and distribution management services company.
Derrick van Rooyen, the chairman of Terrafin, said Sabot, which operated on behalf of international principals, earned 90 percent of its revenues in US dollars.
"The acquisition should be extremely positive for Terrafin's earnings in the years ahead," he said. "Our priority ... is that there is strength in the fundamentals."
The deal, which must still be ratified by Terrafin's shareholders, will be settled by the issue of new shares and cash.
Van Rooyen indicated that an initial payment of R60 million would be raised via a vendor placement, with the balance of the transaction settled by the "phased" issue of new Terrafin shares at R3,50. A total of 45,7 million Terrafin shares would be issued to cover the cost of the acquisition, provided that Sabot met its earnings forecasts.
Van Rooyen said Sabot had operated in the sub-Saharan region for over 20 years and there were indications that the volume of business was likely to grow substantially in future.
"It is important that we spread our service footprint in Africa as early as possible," he said. "We believe Sabot to be the number one choice."
He stressed that additional productivity gains and cost savings would be achieved at Sabot with the introduction of Terrafin's management tools, including its "enfranchised contractor programme".
Van Rooyen said Sabot had enjoyed a long association with Wheels of Africa, the international transport and distribution conglomerate. Billy Rautenbach, the chairman of Wheels of Africa, would be appointed to the Terrafin board.
Terrafin firmed 5c to R3,90 in thin volumes on the JSE yesterday. The share peaked at R4,09 on December 11 after touching a low of 50c in the middle of September last year.