Bidvest acquires Noonan for €175m

BIDVEST Group said it had entered into an agreement to acquire 100 percent of Noonan for €175 million (R2.67 billion), an integrated facilities management services and solutions company, from Alchemy Partners, as well as Noonan’s current management team.

Bidvest, which was spun off from the food service division, Bidcorp in a $5bn (R65bn) listing on the JSE last year, informed its shareholders in February that it would be able to raise $1bn if the firm identified acquisition targets outside of South Africa.

Bidvest chief executive Lindsay Ralphs described the planned purchase as groundbreaking.

“Following the unbundling of our food services business last year, we have said that we intend pursuing a strategy of acquisitions that will provide geographic diversification for certain of our core businesses,” Ralphs said. “This acquisition achieves that objective and fits neatly into our criteria for growth and value enhancement.”

Ralphs said Noonan’s business model was complementary and would help improve its services, increase its client base, and support international growth through further acquisitions.

Bidvest said it would settle the purchase price by way of foreign credit facilities. “Threeyear, variable rate, Euro-denominated funding has been secured at an attractive rate,” the group said.

Noonan is based in Ireland and also operates in the United Kingdom, from where 40 percent of its revenue is derived.

The purchase is still subject to regulatory approval, which the company said it hopes to effect by the end of the month.

Core business Jordan Weir, an equities trader at BayHill Capital, said the approval of the transaction by the SA Reserve Bank would fall in line with Bidvest’s strategy to expand its offshore portfolio and to generate more revenue.

Weir said Noonan’s business model reflected a strong alignment to Bidvest’s core business.

He said it would serve as a well-established and experienced conduit in assisting Bidvest to lay down greater foundations in the UK and European geographies alike.

“Bidvest generated trading profits of around €3.8bn in 2016, so the €175m acquisition price of Noonan indicates that the group is definitely taking steps to expanding its offshore portfolio, however with strategic caution,” Weir said.

Noonan has developed a vertically-focused, client-centric business model that allows for successful expansion in the large facilities management market. The company targets medium-sized clients within its focus industries. It said various external industry research forecast the integrated facilities management market to grow between 4 and 4.5 percent in the next five years.

Noonan chief executive John O’Donoghue was equally pleased with the expected acquisition by Bidvest. “With the backing of such a strong new owner, and with a longterm time horizon, it gives fantastic backing for Noonan to pursue its growth plans.”

Damon Buss, an equity analyst at Electus Fund Managers said the transaction was in line with Bidvest’s diversification strategy.

Bidvest share declined 0.77 percent on the JSE yesterday to close at R167.69.