LONDON (Alliance News) - Afarak Group PLC on Wednesday said it has taken full control of ferroalloy processing business in South Africa after striking a deal to purchase a 10% stake from a worker's trust after several years of negotiations.
The specialty and ferro alloy company purchased a 90% stake in Afarak Mogale back in 2009, leaving the Mogale Alloys Workers Trust with a 10% stake.
Afarak Group has now struck a deal to buy that 10% stake to take 100% control over the business. Despite "numerous requests" for Afarak to buy the stake from the worker's trust over the last five years, a deal has taken a long time to negotiate.
An offer has been tabled to buy the 10% stake for ZAR64.9 million through a share buyback scheme that will trickle through the transfer of the shares to the London-listed company over an eight-year period.
The consideration is equal to around GBP3.9 million, implying the valuation of Afarak Mogale as a whole lies around the GBP40 million mark.
Afarak Group shares were trading down 2.7% on Wednesday at 73.00 pence, giving the company a market capitalisation of about GBP211.7 million.
Willem Smith, managing director of Afarak Mogale, expressed his satisfaction at the conclusion of negotiations. He further added that he felt confident that management and employees were now fully aligned on the shareholding and incentive structure of Afarak Mogale and this should ushera new era of industrial relations, the company said.
"This buy-back is an important element in consolidating our position in South Africa. I would like to thank Alistair Ruiters, the former chief executive officer, and the team at Mogale for concluding the negotiations," said Chief Executive Guy Konsbruck.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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Afarak Group (AFRK)