Pretoria - Sanyati Holdings, a black-empowered civil engineering firm, reported yesterday that it had acquired the KZN Piling group of companies, a geotechnical and civil engineering contractor specialising in piling in KwaZulu-Natal, for R49.2 million.
Rick Jackson, Sanyati's chief executive, said the acquisition had boosted Sanyati's capacity to meet spiralling demand from the construction sector and brought the group a step closer to its medium-term strategy of becoming largely self sufficient.
"There is increasing demand for piling services, particularly in respect of large infrastructure projects. With Sanyati now able to offer this complementary service in-house, the group's ability to secure major government and private tender projects is significantly enhanced," he said.
Jackson said KZN Piling had a steady record of exponential profit growth over the past 10 years, which would help boost Sanyati's bottom line. The acquisition would enhance earnings for Sanyati and the full financial effects of the deal would be announced shortly.
Jackson said recent projects by KZN Piling included multimillion-rand contracts for the Walter Sisulu Square of Dedication in Johannesburg; the parking garage at Durban International Airport; Suncoast Hotel; Point Bay, a mixed-use residential and commercial development at the Point Waterfront; and residential developments in Gateway surrounding Africa's largest shopping centre in the area.
The group also included R20 million worth of equipment, including three large rigs.
Jackson said the fleet would shortly be expanded to include an 80-ton Bauer combination piling rig, the only one of its kind in KwaZulu-Natal.
In terms of the transaction, R20 million of the purchase price is payable in cash as soon as the deal is unconditional.
One of the main outstanding conditions is competition commission approval. About R15 million more is payable in cash thereafter over two years subject to profit warranties.
The balance of the purchase price will be settled in Sanyati shares at R1.60 a share, which is 11 percent less than the current share price of R1.80.
Sanyati listed on the JSE's alternative exchange with a 26.6 percent black economic empowerment shareholding at group level.
The company released its maiden interim results last month, reporting a net profit of R11.3 million for the six months to August compared with R15.8 million for the 12 months of the previous year and headline earnings a share of 5.73c.
It is forecasting revenue growth of 65 percent to R428.2 million in the year to February from R259 million in the previous year, profit before tax of R32.1 million and earnings a share at 11.09c.
Sanyati shares were unchanged at R1.80 yesterday, while the all share gained 0.49 percent.