Insimbi Industrial Holdings shares rose 4.76 percent to close at R1.10 on the JSE on Tuesday after the group said that the Competition Commission had approved its bid for scrap metals dealer Treppo approval without condition. File Photo: IOL

JOHANNESBURG – Insimbi Industrial Holdings shares rose 4.76 percent to close at R1.10 on the JSE on Tuesday after the group said that the Competition Commission had approved its bid for scrap metals dealer Treppo approval without condition.

The group said the transaction would lift it out of the current economic downturn brought on by insufficient government spend on infrastructure and high tariffs imposed by the US in its ongoing trade impasse with China.

Insimbi, which supplies alloys to the steel sector and ceramic refractory linings to the cement, paper and pulp, steel and platinum industries, the acquisition would also help expand its ferrous business and its client base, enhance its access to raw materials for the purposes of beneficiation and gain access to an experienced management team and an international trading network.

The group, which is involved in the sourcing, trading and buying of recycled metals, last year announced the acquisition of scrap metal supplier Group Wreck for R120 million, which helped it grow interim revenue 13 percent to R2.4 billion in the year to end August. It said it remained on the lookout for further acquisitions as a defensive strategy, citing a lack of progress in government economic stimulus programmes as a challenge to its operating environment.

“Insimbi aims to exploit the synergies that exist between the two groups, which may include cost savings, improved margins, an expanded global and regional footprint and, most importantly, further diversification of Insimbi into a larger industrial conglomerate,” it said. 

Treppo has a 13-year record in its niche section of the market and has experienced considerable growth during the recent past.

A further amount, limited to R8.5m, may also become payable, based on the achievement of certain profit targets set over the initial 36-month period post the acquisition.

“It is expected that trading conditions in the second half of the financial year to February 28, 2020, will remain challenging, however, we are confident that the Insimbi group's foundation is stronger and more resilient and that we are better positioned than we have ever been in our almost 50-year history to weather whatever comes our way,” the group said in a statement earlier.

According to media, the latest news on the China-US trade spat is that the two countries were trying to find common ground with China on Tuesday.

BUSINESS REPORT