Omnia Holdings Limited - Acquisition Further Diversifies Group Release Date: 05/06/2003 10:01:01 Code(s): OMN
Omnia Holdings Limited - Acquisition Further Diversifies Group
OMNIA ACQUISITION FURTHER DIVERSIFIES GROUP
(Incorporated in the Republic of South Africa)
(Registration number: 1967/003680/06)
Share Code: OMN
Omnia, a specialised chemical services company providing customised solutions in
the agricultural, mining and industrial chemical markets, today announced that
it has acquired the largest distributor and trader of chemicals in South Africa,
the Prochem Group, for R542 million together with the assumption of about R76
million in interest-bearing debt.
The purchase consideration will be settled as follows:
R187 973 000 from Omnia"s existing cash resources;
R35 631 625 by the issue of new Omnia shares to Prochem that will be distributed
to the existing Prochem management shareholders and the participants in the
Prochem share trust;
R300 000 000 via long term debt raised from a consortium of banks; and
R18 165 375 from existing short-term banking facilities.
Omnia MD Rod Humphris said:
"Following a strategic evaluation process of how best to expand our chemical
interests in South Africa, we decided that the acquisition of a strong service-
based chemical distribution business focused on the customer interface was the
preferred option as it provided immediate low-risk access to in-depth knowledge
of the relevant chemical markets."
Prochem is the major distributor for a number of domestic and international
companies, representing many of the world"s leading chemical companies. Prochem
has a diverse base of customers (over 6 000), products (over 600) and suppliers
(over 100), with no disproportionate contribution from any one customer or
The acquisition will provide Omnia with a more diversified portfolio of
businesses, with a better balance between the agricultural and chemical
interests. Although Omnia has proven its ability to manage risk in the
fertilizer industry despite the effects of weather phenomena like El Nino, the
new balance strengthens this ability further, and will continue to reduce
earnings and cash flow volatility and limit weather-related risk.
"The acquisition represents a carefully considered and decisive move to position
the Group for sustainable profitable growth into the future. It substantially
alters our profile and achieves a much improved balance across our interests,
resulting in a lower relative exposure to Southern African agriculture," added
The acquisition establishes a new platform for growth for Omnia, bringing with
it a host of synergistic benefits that will enhance Omnia"s business model of
adding value to customers by leveraging its intellectual capital and technology.
It provides an established chemical distribution network across South Africa,
serving to strengthen Omnia"s interface with customers.
Prochem has a number of well-known brands in its stable, namely Protea
Chemicals, Chempro, Montan Chemicals and Duravin Chemicals. Prochem also owns
50% of a small chemical distribution business in Zimbabwe.
Prochem brings with it a very experienced management team with a strong focus on
service and a reputation for rapid delivery. Prochem has developed an excellent
and competitive national distribution infrastructure, with 12 points of presence
throughout South Africa.
Prochem has grown organically over its 40 years in existence and has invested in
warehousing, bulk storage, transportation, laboratories and its people. Prochem
has consistently delivered strong results, with current turnover in excess of
R1.5 billion and compounded turnover growth over the last five years in excess
"We are excited about becoming part of the Omnia Group as our businesses are
built on the same fundamental imperative of adding value to our customers. The
deal provides critical mass to both businesses and enables a host of synergistic
benefits we can exploit to further strengthen our offering," said Prochem MD Rod
Although the acquisition is large relative to Omnia"s market capitalisation and
will increase debt levels in the short-term, the strong cash flow generation of
both Omnia and Prochem is expected to reduce debt quickly, aided by expected
lower interest rates in the foreseeable future.
As Omnia is expected to release its results for the year ended 31 March 2003 on
12 June 2003, the pro forma financial effects of the acquisition will be
published with those results.
The acquisition is conditional upon the approval of Omnia shareholders in
general meeting, the granting of the requisite regulatory approvals, including
the Competition Commission, Omnia securing funding arrangements for payment of
part of the purchase price to the reasonable satisfaction of the parties, the
approval of the Prochem shareholders in general meeting, the acceptance of Omnia
of the results of its due diligence and Omnia entering into service agreements
with the key executives of Prochem.
BRUNSWICK SA: Tel: 011 268 5750
Heidi Geldenhuys Cell: 083 325 8924
Glenn O"Hearne Cell: 082 600 7866
For more information contact: Omnia (011) 709 8850
Rod Humphris, MD, (011) 709 8852
5 June 2003
Date: 05/06/2003 10:01:05 AM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department