JSE-listed equipment supplier Barloworld’s Mongolian subsidiary has entered into an agreement with Wagner International to fully acquire its subsidiary Wagner Asia Equipment and 49% of SGMS.
The total consideration for the acquisitions is $216-million, or R3.2-billion, which Barloworld says will be funded from existing offshore cash and debt facilities.
The remaining share in SGMS are held by Battur Battulga, a Mongolian citizen who has been involved in managing SGMS.
Both SGMS and Wagner Asia distribute construction and mining equipment, power systems and related goods and services, in Mongolia, primarily under the Caterpillar brand.
Barloworld says the acquisitions stem from the company wanting to create value by balancing its long-term growth ambitions while focusing on achieving acceptable returns for shareholders in the medium term.
“The group has consistently stated its desire to allocate capital to opportunities that complement its competencies as part of its medium-term strategy. The group’s balance sheet is strong and this opportunity, adjacent to the current Russian operation, presents an attractive growth prospect within the equipment division.
“The Wagner Asia business will be combined with the current Barloworld Russian business unit into a newly formed Equipment Eurasia unit,” the company explains.
The companies in question have net assets valued at $194-million, or R2.9-billion, and for the ten months ended October 31 had a profit after tax of $14-million, or R214-million.
Barloworld expects the transaction to become effective on or about April 1, but a long stop date has been set for October 1.