LONDON (Alliance News) - Anglo African Agriculture PLC on Monday said it has agreed to acquire five logistics companies within the Comarco group of companies for a total of USD30 million in shares.
Once the acquisition is complete, Anglo African intends to change its name to Agulhas Group Africa PLC.
Anglo African, which owns food product manufacturer Dynamic Intertrade Pty Ltd, will acquire Consolidated Marine Contractors Ltd, Comarco Properties EPZ Ltd, Kenya Marine Contractors EPZ Ltd, Touchwood Investments Ltd, and Comarco Supply Base EPZ Ltd.
These five companies account for all of Comarco's Kenya-based companies engaged in port and marine logistics. The acquisition is dependent on an equity fundraising and shareholder approval and will be paid for with USD30 million of new Anglo African shares at 0.5 pence each.
VSA Capital is acting as financial advisor and broker to Anglo African. In addition to the shares consideration, VSA will simultaneously conduct an equity fundraising of around USD15 million to fund the Comarco companies' working capital and growth of the enlarged group. There is also expected to be a USD6 million vendor placing to provide funds to the sellers to settle debts and related costs.
Anglo African has been attempting to expand beyond the agricultural sector and on August 30 announced a proposed working loan facility to the five Comarco companies for use as working capital, which was advanced in November. The loan was intended to be a step toward the diversification of Anglo African's revenue.
"During the course of identifying means to restructure [the Comarco companies], the proposed acquisition as a solution became evident as a mutually beneficial opportunity to help grow both companies," said Anglo African.
The five companies need access to capital markets in order to grow, and Anglo African sees the deal as a chance "to acquire a reputable port and marine logistics business at a strategic time when demand for such businesses have increased". The companies all have US dollar based revenue.
If completed, the acquisition will result in Anglo African shareholders holding a minority interest - most likely under 5% - in the enlarged company and constitutes a reverse takeover under the Listing Rules.
In the year to September 30, 2018, the five Comarco companies produced a combined revenue of USD7.4 million, up from USD5.8 million the year before. The companies recorded USD1.2 million pretax profit in total versus USD14.5 million profit a year ago.
Anglo African Chair David Lenigas said: "This transaction marks a turning point for Anglo African Agriculture. One of AAA's primary reasons for becoming involved with Comarco Group is based on the company's belief that ports are long term growth assets and this particular port is of considerable strategic importance to East Africa."
Lenigas added: "We have further been encouraged by the recent oil and gas transactional activity in the region and the ongoing liquefied natural gas focused work in Mozambique, all of which bode well for Comarco Group's marine logistics focused business."
Once the enlarged group is re-admitted to trading, Lenigas will resign from the board. Non-executive directors Andrew Monk and George Roach will also resign. Executive Director Robert Scott and Non-Executive Director Matthew Bonner will remain on the board.
Shares in Anglo African were down 1.1% at 0.44 pence on Monday afternoon.