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AECI to acquire GE's chemical business

Johannesburg - Chemicals group AECI [JSE:AFE] announced on Thursday that it had entered an agreement with General Electric (GE) to acquire its world class Chemical and Monitoring Solutions business in Africa‚ for a total consideration of $20m.

The acquisition is effective from July 1 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 acquisition covers Africa - excluding Algeria‚ Egypt‚ Libya‚ Morocco and Tunisia - as well as the Indian Ocean islands of Madagascar‚ Mauritius‚ Reunion‚ Rodrigues and the Seychelles.

“The market in these areas is growing strongly‚” the company said.

The acquisition components outside SA are subject to approval by the South African Reserve Bank.

ImproChem provides integrated water‚ energy and air solutions to the chemical‚ refining‚ petrochemical‚ mining‚ and food and beverage industries‚ and already has a well-established footprint in Africa.

“The agreement with GE will ensure customers covered by the acquisition‚ 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 said.

GE entered a nonexclusive distribution arrangement with ImproChem in October 2011. In addition to the acquisition‚ AECI and GE have now also entered an exclusive distribution agreement and a licensing arrangement that provide GE with continued direct involvement with the business.

As part of the acquisition 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.

“Both GE and AECI believe 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‚” the company said.

In addition‚ GE has an experienced team of salespeople in the field and strong regional capabilities that will complement ImproChem’s resources.

The acquisition has been approved by the Competition Commission in SA.

 
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