Johannesburg - Investment holding company Tiso Blackstar Group will acquire control of steel maker Robor in a deal worth R29.6 million.
Tiso says in a statement it is increasing its stake from 19.4% to 51% because Robor is “well positioned for growth and expansion”. It will pay for the offer through the issue of 1.7 million new shares.
The dual-listed company aims to invest in business with underlying themes of strategic market positions and strong cash flows, with a particular focus on businesses within Sub-Saharan Africa.
It focuses on principal areas of media, industrial and Kagiso Tiso Holdings.
The listed investment company says it is buying Robor at a cyclical low and “therefore at an attractive time in the cycle and at an attractive price”.
However, the steel sector is currently going through a tough time as it battles cheap Chinese imports.
ArcelorMittal has already said it may cut 1 200 jobs as it considers whether to shut down its 102-year-old Vereeniging works, while rival Evraz Highveld Steel and Vanadium recently became the first casualty of cheap Chinese imports when it said it was being forced to temporarily halt manufacturing, and would retrench 1 100 employees.
ArcelorMittal wants the government to step in and impose trade duties on the subsidised steel from the east.
Despite the woes facing the sector, Tiso is confident, noting Robor has an existing and growing African footprint that will benefit from the increasing infrastructure spend taking place on the African continent.
“With a strong balance sheet and an aligned management team who will hold the remaining 49% of the shares in the company, Robor is well positioned for expansion and growth.”
Robor was established in 1922 and makes and supplies welded steel tube and pipe, cold-formed steel profiles and associated value added products. The company also supplies, distributes and adds value to carbon steel coil, plate, sheet and structural profiles.
Tiso says Robor is the largest tube and pipe solution company in Southern Africa and is active in most industries including, mining transport – rail and road, construction, engineering, manufacturing, agriculture, energy, water and automotive.
The company generated a profit of R74.8 million before extraordinary items and taxation for its year ended 30 September 2014 and recently bought out Tricom Structures, which designs, develops and manufactures steel structures for telecom tower companies, cell phone operators and power sectors.
“The demand for Tricom products/solutions is growing in Africa and will add value to Robor’s capabilities in terms of providing solutions across various market segments,” says Tiso.
The deal, which is subject to conditions, is expected to be wrapped up by the end of November.
IOL