Johannesburg – Listed industrial group Jasco is
spending as much as R52.3 million on a 65.4 percent stake in Cross Fire
Management.
In a statement issued on Wednesday, the company
said the deal will improve its
Fire Solutions’ offering in the blue-chip corporate market.
Cross Fire was
established in 1990 in Johannesburg and specialises in the design, supply,
fabrication, installation, servicing and maintenance of a range of fire protection
systems for various industries and protected risk specifications.
Jasco says,
adding Cross Fire to its stable will make it one of the top three suppliers of
fire detection, suppression and protection solutions in various industries,
including construction, retail, logistics and financial services. Jasco’s
differentiation in the market will be further enhanced with the addition of
Cross Fire’s specialised system design and consulting capabilities to Jasco’s
existing fabrication and deployment abilities, it says.
CEO Pete da
Silva says the deal “fulfils our strategy of moving up the value chain towards
a higher-margin professional service and consulting offering in our fire
business. As we have restructured the group, reduced gearing to within our
internal range of less than 50 percent and are improving operating performance,
we are executing our strategic plan of measured acquisitions that either bulk
up existing business units or fill gaps in our portfolio to supplement organic
growth.
“This also meets
our goal of continuing to align our portfolio of businesses and related
products and services offerings to serve our blue-chip customer base in niche
markets.”
Cross Fire’s
operations cover Johannesburg, Cape Town, Durban and Accra (Ghana). Its
customer base spans the construction, retail, logistics and financial services
industries. It has a track record of double-digit revenue growth with a
consistent operating margin above 9 percent.
Jasco notes the deal
will bulk up its fire solutions offering from the current R30
million in revenue a year to more than R200 million, which meets minimum R150
million strategic revenue threshold for each business unit.
Read also: Jasco focuses on bottom line
It also provides access to West Africa, specifically Ghana, through
Cross Fire’s four years’ regional presence. It notes the deal, still subject to
regulatory approval, will see the current management team and founder will stay
in place, with retention agreements for a minimum of two years.
The purchase
price will be settled with a R20 million initial payment and two additional
maximum payments of just over R16 million over the next year, based on
financial performance.
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