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Steinhoff-linked KAP soars on R4.1bn buy

Aug 10 2016 16:09
Liezel Hill

Johannesburg - KAP Industrial Holdings [JSE:KAP], the South African company whose biggest investor is Steinhoff International Holdings [JSE:SHF], is on track to close at the highest level in seven months after agreeing to buy plastics manufacturer Safripol Holdings for R4.1bn ($308m).

KAP rose as much as 6% to R6.94 a share, and was at R6.75 at 16:00 in Johannesburg, set for its highest close since January 6. About 9 million shares were traded, more than four times the three-month daily average.

KAP will buy Safripol in cash, on a debt-free basis, from Rockwood Private Equity, Thebe Investment and management in a transaction that’s expected to be completed by January 1, the Stellenbosch, South Africa-based company said in a statement on Wednesday. Safripol will form part of KAP’s diversified chemical division, which already includes its Hosaf and Woodchem businesses.

KAP, whose businesses range from transporting fuel to producing automotive components and timber, has already been expanding through acquisitions. Earlier this year, it agreed to buy Autovest, a car accessories producer, which followed the 2015 purchase of a mattress business. Safripol makes polypropylene and high-density polyethylene, which are used in a range of industrial and consumer products.

“The Safripol business operates in the chemical sector and produces complementary products to those of Hosaf, with a similar business model,” the company said. “The transaction represents an ideal fit for KAP in terms of its key investment criteria.”

Furniture chain Steinhoff raised its stake in KAP in 2012 in exchange for industrial assets. It’s since moved on to bigger deals, including an agreement this week to buy Mattress Firm Holding of the US for about $2.4bn.

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