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African Oxygen Limited - Afrox Concludes Largest Empowerment Transaction Outside

Release Date: 17/11/2003 09:05:00      Code(s): AFX
African Oxygen Limited - Afrox Concludes Largest Empowerment Transaction Outside
                         Of The Mining Sector                                   
AFRICAN OXYGEN LIMITED                                                          
(Registration number 1927/000089/06)                                            
(Incorporated in the Republic of South Africa)                                  
ISIN Code: ZAE000030920                                                         
JSE Share Code: AFX                                                             
Press Release                                                                   
African Oxygen Limited ("Afrox") today announced that its subsidiary company,   
Afrox Healthcare Limited ("AHealth"), will become the first BEE-owned and       
controlled private hospital group in South Africa.  This follows Afrox"s        
decision to sell its 69% stake in AHealth to a consortium of BEE investors,     
Business Venture Investments Limited ("Bidco"), for R3.1 billion.               
Bidco is to be approximately 75% owned by a BEE consortium, with the balance to 
be held by Medi-Clinic Corporation Limited ("Medi-Clinic").  The BEE consortium 
is to be led by Brimstone Investment Corporation Limited ("Brimstone") and      
Mvelaphanda Strategic Investments (Proprietary) Limited ("Mvelaphanda"),        
supported by nationally and regionally based doctor and empowerment groupings   
ensuring broad based empowerment.                                               
Commenting on this landmark deal, Afrox CEO Rick Hogben said:                   
"We are very proud to be a part of this ground breaking deal.  We have realised 
the benefits of our investment in Healthcare and although they will continue to 
provide sound growth, the bulk of the industry consolidation and aquistional    
growth has been achieved. The Afrox Board felt strongly that a deal which       
provided AHealth with a BEE partner was vital if it was to remain competitive   
and be positioned to pursue new investment in the healthcare sector, both       
locally and globally.                                                           
"We believe that the business has reached the requisite scale and level of      
success and sophistication such that operating as an autonomous, empowered      
entity will better enable it to pursue its own growth initiatives, without      
The cash sale consideration is R13.85 per AHealth share, escalated at an        
effective rate of 5.60% per annum from 1 October 2003 to the date of the scheme 
being implemented.  For example, if the scheme operative date is 30 April 2004, 
the offer consideration, including the escalation, is R14.30.  In addition      
AHealth shareholders on the share register on 23 January 2004, will be entitled 
to retain the dividend of R0.40 per share for the year ended 30 September 2003. 
AHealth will be sold as a going concern and all managers and staff will be kept 
intact through the transaction.                                                 
Commenting on joining forces with Bidco, Mike Flemming, MD of AHealth said:     
"I welcome the South African ownership of AHealth and it being solely focused on
healthcare delivery.  This ensures an alignment of the Bidco"s strategy with    
that of AHealth.                                                                
"I am excited by the calibre of the empowerment component of Bidco as it is a   
critical prerequisite for business success in South Africa."                    
Over the past two years, Afrox has focused on developing new markets, extending 
its global customer base and added to its product and service offerings to      
existing and new customers. It has optimised its human capital, technology, and 
production facilities to increase its productivity and global competitiveness,  
improving its brand awareness and marketing focus whilst becoming customer and  
service centered.                                                               
"Few synergies exist between the industrial and Healthcare businesses - as each 
division has grown, so dysynergies have become evident in areas such as HR, IM  
and Finance. With both businesses generating good cash returns, we decided that 
a separation would ensure continued growth," Hogben added.                      
"The sale of Afrox Healthcare represents a major step in delivering on the      
Group"s primary objective of maximising the potential of its Industrial         
businesses. We will focus on new innovative ways of growing market share and    
creating further operational improvements. We will also consider earnings       
enhancing acquisitions, including additional expansion into Africa," Hogben     
For further information please contact:                                         
Afrox                              (011) 490 0400                               
Rick Hogben, CEO                   (011) 490-0504                               
Chris Fieldgate                    (011) 490-0430 / 082 495 1481                
Notes to Editors:                                                               
African Oxygen Limited                                                          
Afrox"s businesses operate according to global reporting structures as set by   
the global BOC group. This worldwide operating system provides the businesses in
South Africa with an enviable advantage in the market. Not only does the system 
provide best operating practices by which to benchmark Afrox against peers      
around the world, but it allows all the companies within The BOC Group to `speak
the same language" and have access to worldwide generated research and          
development. To ascertain which systems have worked well, and which can be      
replicated in other countries, regular international meetings are held.         
Afrox"s ISP business operates on an impressive infrastructure. Its transport    
fleet, which consists of over 500 vehicles, operates from 113 South African     
branches and 30 branches and distributors in 16 other African countries. The    
business has 3 million cylinders in circulation and offers a range of over 3,000
products. This infrastructure supports Afrox "s customer base, which exceeds    
70,000. Some 85 percent of all industrial products and 60 percent of Handigas   
sales are supplied directly to end-users. In South Africa, ISP has the ability  
to supply thousands of gases, special gases and gas mixtures. Handigas, Afrox "s
liquefied petroleum gas brand, and certain gaseous chemicals, such as           
propellants and refrigerant gases, are outsourced in bulk, and delivered to     
customers in bulk or in several sizes of cylinders, depending on customer       
Afrox"s PGS business boasts a sophisticated infrastructure in South Africa and  
sub- Saharan Africa from which it services customers with large volumes of gas. 
Through PGS, Afrox is able to supply its customers by bulk road tankers,        
pipeline, or from gas producing pressure swing adsorption plants (PSAs). The    
main products supplied are oxygen, nitrogen, argon, carbon dioxide, and         
hydrogen. These products are obtained from strategically sited plants throughout
South Africa. They include 14 large plants, mainly producing oxygen, nitrogen   
and argon; five carbon dioxide plants; two hydrogen plants; and 22 gas producing
pressure swing adsorption plants, mainly sited on customer premises.            
Afrox Healthcare Limited                                                        
Afrox Healthcare is a private healthcare service provider listed on the JSE     
Securities Exchange South Africa ("JSE").  Afrox Healthcare was formed in 1999  
through the merging and reverse listing of the healthcare operations of Afrox   
into President Medical Investments Limited ("Presmed"), subsequently re-named   
Afrox Healthcare Limited.  Operations consist of private hospitals and          
healthcare services.                                                            
The hospital division forms the bulk of Afrox Healthcare"s business and         
comprises 63 acute care hospitals throughout South Africa.  The AHealth hospital
portfolio includes the following key hospitals: Wilgers; Eugene Marais;         
Entabeni; Flora Clinic; St Dominics; Rosepark; St Georges; The Glynnwood;       
Westville and Vincent Pallotti.                                                 
The hospital division also includes Afrox Rehabilitation, which specialises in  
acute, outcomes-driven physical and cognitive rehabilitation for patients       
disabled by traumatic brain or spinal injury, stroke or other disabling         
The healthcare services division includes Lifecare Special Health, a public-    
private-partnership ("PPP"), which has 22 chronic care hospitals and 2 two acute
care hospitals; Direct Medicines, a pharmaceutical benefit management company   
and Afrox Occupational Healthcare ("AFROHC"), a leading provider of contracted  
on-site healthcare to corporates.                                               
In addition to the hospital and healthcare services, AHealth has the following  
ancillary services: Afrox College of Learning and ER24, a national emergency    
service network which it operates as a joint venture with Medi-Clinic.          
Bidco is to be 75% owned by a BEE consortium, led by Brimstone and Mvelaphanda, 
with the balance to be held by Medi-Clinic Corporation Limited ("Medi-Clinic"). 
Mvelaphanda Strategic Investments is a subsidiary of black owned and managed    
investment company Mvelaphanda Holdings. The company has synergistic investments
in a number of leading technology, healthcare, property management, security,   
industrial and transport companies. Mvelaphanda has an inclusive philosophy     
towards empowerment and believes that community participation is critical to it 
future success.                                                                 
Brimstone Investment Corporation is a black-owned and managed investment holding
company listed on the JSE Securities Exchange SA. Major investments include 10% 
of Peoples Bank and 11% of Sea Harvest Corporation. It seeks to achieve above   
average returns for shareholders by investing in wealth creating businesses and 
entering into strategic alliances to which it contributes capital, innovative   
ideas, management expertise, impeccable empowerment credentials and a value-    
driven corporate identity.                                                      
Medi-Clinic Corporation is a listed provider of comprehensive, high-quality     
hospital services on a cost-effective basis. The group operates forty hospitals.
Fifteen are located in the Western Cape, nine in Gauteng, four in Mpumalanga,   
three in the Free State, two in the Northern Cape, two in Kwazulu-Natal, two in 
the Northwest Province, one in the Limpopo (Northern) Province and two in       
Namibia. Industrial holding company Remgro owns 51% of Medi-Clinic Corporation. 
17 November 2003                                                                
Date: 17/11/2003 09:05:05 AM Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department                                             

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