Wednesday, June 29, 2011

South African companies active onshore and offshore

In the first half of the year, South African companies announced plans to invest $5.5 billion (R38bn) in 28 acquisitions offshore, according to Thomson Reuters, an information provider that monitors corporate activity worldwide. And local companies were targeted in 55 deals worth $4.1bn.

Last year, 86 outward bound deals were valued at just more than $4.7bn while 108 inward transactions were worth about $8.7bn. Thomson Reuters’ figures are based on all announced deals in a period, both pending and completed.

Steinhoff International’s $1.7bn purchase of French furniture retailer Conforama, from French luxury goods group PPR, was the biggest deal between January and June. PPR, the parent company of Gucci, reportedly sold off the non-core business to focus on its luxury operations.

In March, Steinhoff shareholders approved the deal, allowing the company, which is the largest furniture manufacturer in Africa, to buy nearly 100 percent of Conforama.

Bloomberg said the deal would add 241 stores to Steinhoff’s 951 retail outlets in Europe. And the news agency reported that Steinhoff operated 50 factories in countries including Poland, the Netherlands, Australia and South Africa.

The next biggest deal in the first half was the $1.3bn acquisition, by the Public Investment Corporation and Growthpoint, of the V&A Waterfront from Dubai World and London & Regional Properties. The sellers had acquired the property in a private equity deal from Transnet in 2006 for $1bn. The deal took place through a special purpose vehicle, Lexshell 44 General Trading.

The following year Dubai World was reported to be investing another $1bn in V&A.

Dubai World was set up in 2006 to diversify the emirate of Dubai’s economy out of oil but the company’s ambitious investment plans were hit by the global recession. In November 2009, the Guardian in the UK reported that the state-owned company would seek a six-month moratorium on repayments on its $60bn in debt.

Dubai World then embarked on a divestment programme.

In April Brazil’s Vale, the world’s largest iron ore producer according to Reuters, announced plans to buy South African mining company Metorex for access to its copper and cobalt operations in the Democratic Republic of Congo and Zambia. Thomson Reuters, which values the deal at $1.2bn, described it as pending.

Sasol said earlier this month that it had completed the acquisition of Canada’s oil and gas exploration group Talisman’s Cypress A acreage. Thompson Reuters said the completed deal was worth $1.1bn.

South Africa’s Taung Gold is the target of a $985.8 million takeover by Chinese construction firm Wing Hing.

Reuters said last week that global mergers and acquisitions) had risen 40 percent so far this year to $1.4 trillion, the best first half since 2008