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Johannesburg - Shares in Afrimat [JSE:AFT] jumped more than 7% as the South African building materials supplier said it will pay R123.5m to buy domestic concrete maker Clinker Group.
Afrimat, which says the deal reduces its exposure to cyclical factors, is up 7.64% at R4.65.
Afrimat CEO Andries van Heerden said: "The acquisition is in line with our strategy of seeking out new avenues for growth and presents us with a unique opportunity to generate further revenue opportunities through new product development as well as a refined, focused marketing strategy."
The Clinker Supplies group has a profit after tax of about R30.0m, which would equate to a return on equity for Afrimat of approximately 24% per annum.
The acquisition also provided Afrimat with a hedge against the volatile cyclicality associated with the aggregates industry.
"Due to clinker's distinct characteristics, which are difficult to substitute, it has proven resistant to market fluctuations," Van Heerden said.
The full activities of the Clinker Supplies group included the extraction of clinker raw material from various stockpiles and the processing thereof into products of various specifications, primarily for use in the concrete manufacturing industry. Clinker dumps have a lifespan of 10 years.
Afrimat, which says the deal reduces its exposure to cyclical factors, is up 7.64% at R4.65.
Afrimat CEO Andries van Heerden said: "The acquisition is in line with our strategy of seeking out new avenues for growth and presents us with a unique opportunity to generate further revenue opportunities through new product development as well as a refined, focused marketing strategy."
The Clinker Supplies group has a profit after tax of about R30.0m, which would equate to a return on equity for Afrimat of approximately 24% per annum.
The acquisition also provided Afrimat with a hedge against the volatile cyclicality associated with the aggregates industry.
"Due to clinker's distinct characteristics, which are difficult to substitute, it has proven resistant to market fluctuations," Van Heerden said.
The full activities of the Clinker Supplies group included the extraction of clinker raw material from various stockpiles and the processing thereof into products of various specifications, primarily for use in the concrete manufacturing industry. Clinker dumps have a lifespan of 10 years.
