Sign In
Last checked at 
27 Jun 2012 14:00
AECI LIMITED Incorporated in the Republic of South Africa (Registration No. 1924/002590/06) Share code: AFE ISIN No. ZAE000000220 ("AECI")
AECI ACQUIRES WATER TREATMENT BUSINESS IN AFRICA
AECI has acquired General Electric's world-class Chemical and Monitoring Solutions business in Africa, for a total consideration of US$20 million. The acquisition is effective from 1 July 2012 and will be merged into ImproChem, which is leading the AECI Group's strategic growth thrust to become the supplier of choice for specialty water treatment and process chemicals and services in Africa.
The geographies covered by the transaction are Africa and the Indian Ocean islands of Madagascar, Mauritius and Reunion. This target market has an estimated combined annual value in excess of US$500 million and is growing at 12% a year. Excluded from the transaction are businesses in Egypt, Libya, Tunisia, Algeria and Morocco.
ImproChem provides integrated water, energy and air solutions to the chemical, refining, petrochemical, mining and food and beverage industries. It is has a well-established footprint in Africa and the agreement with General Electric (GE) will ensure that customers in this region, where water is often a scarce resource, continue to have access to the most advanced technologies that enhance the efficiencies of their operations while reducing operating costs.
AECI and GE have also entered into an exclusive distribution agreement and a licensing arrangement that provide GE with continued direct involvement with the business. As part of the agreement, ImproChem will produce chemical products using GE formulations at its Umbogintwini plant. GE will also have the right to consider forming a Joint Venture with ImproChem in the future. GE remains committed to the CMS business, as demonstrated by its continued investment in CMS research and development and in its CMS commercial sales and distribution channels.
GE entered into a non-exclusive distribution arrangement with ImproChem in October 2011. This new transaction builds on that solid foundation and both GE and AECI believe that the new arrangement provides greater opportunities than either company could offer alone. It is well aligned with both companies' business models, both have a good reputation in the region and a well-regarded compliance culture. GE also has an experienced team of sales people in the field and strong regional capabilities that will complement ImproChem's resources.
The transaction has been approved by the necessary regulatory authorities in South Africa.
Woodmead, Sandton27 June 2012
Sponsor: RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Follow the stocks
