LSA Group, a member of the Holcim Group, provides 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. It will increase Afrimat’s offering in the construction industry by expanding our quarry and ready-mix operations nationally and allowing for Afrimat to enter the cement value chain competitively.”
Afrimat is highly cash-generative and effectively debt free, financing this acquisition 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, ready mix batching plants, integrated cement plants, 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 equity acquisition in the LSA Group is $6 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 ten business days after all the conditions precedent have been met.
Van Heerden adds: “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: “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 built on our successful integration of similar transactions. Afrimat’s Construction Materials division contains all the expertise and strategic management execution capabilities required to ensure the successful integration and expansion of our products into the infrastructure and construction sectors of South Africa.”
According to Van Heerden, management is confident that a sharp commercial strategy comprising operations, marketing, and logistics will enhance the Afrimat Group’s overall business strategy in the Construction Materials segment.
Van Heerden continues: “Afrimat believes the private sector will assist significantly in reducing the need for load-shedding over the next two years and that Government will, at the very least, realise that it needs to maintain infrastructure. This will greatly benefit the Construction Materials and Industrial Minerals divisions as Afrimat is well-positioned to provide the aggregates and products necessary for this infrastructure maintenance.”
Van Heerden concludes this acquisition sits well with Afrimat Group’s cash generation, operational expertise and capacity and follows thorough market research. “I am confident that we have the marketing and logistics know-how, expertise, experience, skills and business acumen to inculcate all elements of this acquisition into our current businesses and continue to ensure the growth of Afrimat through diversification. As always, Afrimat will execute this exciting endeavour guided by the precision and cautiousness we have become known for.”
