Imperial chief executive Mark Lamberti yesterday said that the transaction was in line with the group’s strategy to invest only in its core capabilities. He said the disposal price was in line with the invested capital of the business.
The specialisation and capital intensity of chemical contract manufacturing was not aligned with Imperial Logistics’ established capabilities in transportation, warehousing, distribution and synchronisation management or Imperial’s stated objective of reducing capital intensity.
“Moreover, there are no operational or financial synergies between chemical contract manufacturing and Imperial Logistics’ other operations. As a result, Imperial has decided to divest from Schirm,” he said.
AECI chief executive Mark Dytor said Schirm was the group’s first major acquisition in Europe and a giant leap in its international expansion strategy.
AECI already has well-established businesses in Africa, Australia, South East Asia and the US. Schirm has four sites in Germany and one in the US.
Dytor said there was a compelling case for AECI to acquire Schirm, which would become part of its plant & animal health strategic pillar where it would operate as a standalone entity.
“It has an important role to play in terms of developing the group’s manufacturing excellence capability, enhancing its geographic footprint and growing the diversity of its product portfolios in plant and animal health particularly and chemicals generally. “The northern/southern hemisphere presence means being able to reduce the peaks and troughs of seasonal demand cycles in the agrochemicals business. It also provides currency diversification for AECI,” he said.
Dytor added that over the last two years alone Schirm has invested almost 25m in capital expenditure programmes and the resultant financial benefits were expected from the financial year to end-June next year.
Schirm in the financial year to June reported revenue of 115.6m, with about 80percent from Europe, primarily Germany, and the balance from the US. It reported earnings before interest, tax, depreciation and amortisation of 13.8m.
Dytor said the acquisition of Schirm was “a game changer” for AECI and a number of synergies had been identified, such as supply chain efficiencies for AECI businesses that were currently selling in Europe. “A local base will remove shipping from South Africa and open up new avenues for growing AECI’s offerings in Europe and North Africa.
“There is also an opportunity to replace some raw materials imports from third parties,” he said. Schirm employs almost 800 people and no restructuring is planned. Shares in Imperial dropped 1.16percent to close at R207.06 on the JSE yesterday. AECI shares closed 1.83percent lower on the day at R101.90.
- BUSINESS REPORT