CAPE TOWN - Barloworld has reached a deal to acquire Wagner Asia Equipment for an estimated $216.8million (R3.25bn) cash.
The heavy equipment group first cautioned shareholders that it was in talks with the Mongolia-based company in May last year.
Barloworld said yesterday that they had reached agreement on January 31, 2020, to purchase 100percent of Wagner Asia Equipment, and 49percent of the share capital SGMS, also from Mongolia, both of which would be funded from Barlworld’s existing offshore cash and debt facilities.
The remaining shares in SGMS would continue to be held by Battur Battulga, a Mongolian businessperson actively involved in managing SGMS, which supplies equipment, parts and services to a key customer.
The Wagner family, through Wagner International, have been doing business in Mongolia for more than 22 years and are also long-standing Caterpillar dealers in the US.
The companies acquired by Barloworld are involved in selling and distributing construction equipment, mining equipment, power systems, and related goods and services in Mongolia, primarily under the Caterpillar brand.
The acquisitions were in line with its aim to allocate capital to opportunities that complement its businesses.
“The balance sheet is strong and this opportunity, adjacent to the current Russian operation, presents an attractive growth prospect within Barloworld’s equipment division,” the group said.
The intention was to combine the Wagner Asia Equipment business with the Barloworld Russian business into a newly Equipment Eurasia unit.
The combined net asset value of the companies being acquired was $141.8m, although the value would be adjusted based on agreed valuation principles, with the purchase price capped at $265m. Barloworld’s share price increased marginally by 0.86percent to R94.20 yesterday on the JSE.