Italtile puts down R3.75bn offer for tile maker

Italtile Ltd - Kilimanjaro tile display.CTM Northriding.Photo Supplied

Italtile Ltd - Kilimanjaro tile display.CTM Northriding.Photo Supplied

Published Apr 26, 2016

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Johannesburg - Italtile, which has been trading under cautionary since February 11, is set to buy a majority stake in Ceramic Industries for R3.75 billion.

In a statement issued on Tuesday, the tile retailer says it has submitted an offer to buy all the shares in Ceramic that are not already owned by its subsidiary, Italtile Ceramics.

As a result, the company will buy 75 percent of Ceramic for R3.75 billion, half of which will be paid for in shares, with the bulk to be paid in cash.

In addition, says Italtile in a statement, to avoid diluting shares through the payment, it will do a rights offer, offering 22 shares for every 100 shares held in Italtile at R11.57 a share.

Italtile last traded at R13.05.

Italtile believes the deal will benefit both companies because the “the long term success and sustainability of both Italtile and Ceramic are inextricably intertwined and have been for the last two decades”.

The deal will also reduce the risk of either company relying on either a single large customer, or a large manufacturer.

Read also:  Italtile boosts revenue to R3bn

In addition, integrating the two companies will allow Ceramic access to better, real time market information, which will improve production planning ability.

Italtile also notes the deal will enable supply chains to be integrated, and skills to be shared.

Ceramic owns five tile factories, one sanitaryware factory and one acrylic bath factory, based in South Africa, as well as one tile factory based in Australia.

The tile factories (Samca Floor, Samca Wall, Vitro, Pegasus, Gryphon and Centaurus) manufacture a combination of pressed and extruded tiles in various sizes, textures and finishes, while the sanitaryware factory (Betta) manufactures a wide range of vitreous china sanitaryware, the main focus being on water closets, basins, cisterns and pedestals.

Ceramic’s acrylic bath factory manufactures a comprehensive range of baths and shower trays, catering for all sectors of the local market.

The deal is subject to the customary conditions.

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