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It said in a statement that R131.439m of the purchase price has been deferred as it was subject to the Megatron business achieving a stipulated net profit after tax for the 12-month period after the effective date of sale, which is March next year.
If the Megatron business fails to meet the condition, Ellies said the deferred portion will be reduced, but it added that there was a minimum purchase consideration for the business agreed of R48.750m.
Ellies currently distributes smaller generators to the domestic market, but it said that demand by its retail customers for larger generators has increased.
It added that acquiring the Megatron business, which specialises in the fields of power generation, transmission and distribution, would offer Ellies the opportunity to meet the higher demand.
"Megatron Federal and Ellies are a natural fit," said Wayne Samson, CEO of Ellies, adding that the acquisition allows Ellies to expand its product range from mostly domestic electrical products to power generation, transmission and distribution products.
"This will be crucial when load-shedding becomes a problem," he said.
Megatron's client base currently includes City Power, City of Tshwane Metropolitan Municipality, Anglo Platinum, Teal Mining and Ethekweni Municipality, and approximately 30% of Megatron Federal's revenues are foreign currency based with exports to countries such as Zambia, Democratic Republic of the Congo, Ghana, Burkina Faso and United Arab Emirates.
"The acquisition ties in with Ellies' objective to increase our supply to Government and expand our footprint into Africa. Ellies will continue to seek out opportunities to develop its product range and services across the electrical and power spectrum," concluded Samson.
- I-Net Bridge
