Barloworld to sell Iberian equipment business, shares hit
Barloworld will sell its underperforming Iberian equipment business to privately-owned Italian group Tesa following a strategic review.
Shares in the equipment, car rental and logistics provider fell more than 7% after Wednesday's announcement, in which Barloworld said the overall proceeds of the transaction are estimated to be R2.4-billion.
Barloworld Equipment is the official dealer for Caterpillar's, CAT construction, mining and industrial machine range in eleven Southern African countries, in addition to Spain, Portugal, Siberia and the Russian far east.
Spain and Portugal fall under Iberian Equipment, which has represented Caterpillar there for the last 26 years.
Barloworld carried out a strategic review in 2017 that entailed fixing and addressing underperforming businesses, optimising returns from its existing portfolio and looking at high growth opportunities based on existing capabilities.
This highlighted the underperformance of the Iberian equipment business which has recently undergone a business improvement plan which is expected to improve profitability, although its ability to hit Barloworld's targeted return remains unclear, it said last year.
As part of the deal, Barloworld acting through its wholly owned UK subsidiary, Barloworld UK, will sell 100% of the issued shares in Barloworld International, the holding company of the Iberian businesses, to Tesa.
"The proceeds will remain offshore to be used to fund future growth initiatives that are currently under consideration," Barloworld said.
The sale price will be determined at the closing date, which is expected to be no later than July 2, after all conditions have been met, Barloworld said, adding that it had provided specific warranties and indemnities as well as a guarantee in respect of its obligations post-closing.
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