Johannesburg – Listed industrial group Jasco is spending as much as R52.3 million on a 65.4 percent stake in Cross Fire Management.
In a statement issued on Wednesday, the company said the deal will improve its Fire Solutions’ offering in the blue-chip corporate market.
Cross Fire was established in 1990 in Johannesburg and specialises in the design, supply, fabrication, installation, servicing and maintenance of a range of fire protection systems for various industries and protected risk specifications.
Jasco says, adding Cross Fire to its stable will make it one of the top three suppliers of fire detection, suppression and protection solutions in various industries, including construction, retail, logistics and financial services. Jasco’s differentiation in the market will be further enhanced with the addition of Cross Fire’s specialised system design and consulting capabilities to Jasco’s existing fabrication and deployment abilities, it says.
CEO Pete da Silva says the deal “fulfils our strategy of moving up the value chain towards a higher-margin professional service and consulting offering in our fire business. As we have restructured the group, reduced gearing to within our internal range of less than 50 percent and are improving operating performance, we are executing our strategic plan of measured acquisitions that either bulk up existing business units or fill gaps in our portfolio to supplement organic growth.
“This also meets our goal of continuing to align our portfolio of businesses and related products and services offerings to serve our blue-chip customer base in niche markets.”
Cross Fire’s operations cover Johannesburg, Cape Town, Durban and Accra (Ghana). Its customer base spans the construction, retail, logistics and financial services industries. It has a track record of double-digit revenue growth with a consistent operating margin above 9 percent.
Jasco notes the deal will bulk up its fire solutions offering from the current R30 million in revenue a year to more than R200 million, which meets minimum R150 million strategic revenue threshold for each business unit.
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It also provides access to West Africa, specifically Ghana, through Cross Fire’s four years’ regional presence. It notes the deal, still subject to regulatory approval, will see the current management team and founder will stay in place, with retention agreements for a minimum of two years.
The purchase price will be settled with a R20 million initial payment and two additional maximum payments of just over R16 million over the next year, based on financial performance.
BUSINESS REPORT ONLINE