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.
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.
Following completion of all of the pre-conditions (expected to be in mid-September but by no later than 30 November 2015), the Company will make an application to both the London Stock Exchange and the JSE for admission of 1,740,358 new Tiso Blackstar Group SE shares to AIM and the JSE, and will seek to implement the Robor Transaction immediately thereafter.