Trans­ac­tion her­alds new dawn for dis­tri­bu­tion firm

Cape Times - - COMPANIES - Roy Cokayne

JSE-LISTED plumb­ing and hard­ware brands man­u­fac­turer and dis­trib­u­tor Dis­tri­bu­tion and Ware­hous­ing Net­work (Dawn) has sold its 49 per­cent in­ter­est in Grohe Dawn Watertech (GDWT) to the listed Ja­pan-based Lixil Group Cor­po­ra­tion for R324.5 mil­lion.

How­ever, Dawn will re­main a long-term master dis­trib­u­tor of the GDWT prod­uct range in South Africa and 12 coun­tries in sub-Sa­ha­ran Africa fol­low­ing the com­ple­tion of the trans­ac­tion.

Ed­win He­witt, the chief ex­ec­u­tive of Dawn, said yes­ter­day they had achieved the best of both worlds be­cause the dis­posal would re­sult in Dawn be­ing debt free and it would re­tain the master dis­trib­u­tor­ship to a highly de­sir­able prod­uct range.

Kinya Seto, the pres­i­dent and chief ex­ec­u­tive of Lixil, said the group was ex­pand­ing the global foot­print of its wa­ter tech­nol­ogy busi­ness with this trans­ac­tion.

“Full own­er­ship of GDWT will strate­gi­cally po­si­tion us for growth in South Africa and the emerg­ing mar­kets of sub-Sa­ha­ran Africa.

“This trans­ac­tion also al­lows us greater flex­i­bil­ity in man­ag­ing the brand port­fo­lio and busi­ness strat­egy in this re­gion.

“Tak­ing full con­trol of the busi­ness will al­low us to ac­cel­er­ate th­ese ac­tiv­i­ties and, ul­ti­mately, gen­er­ate sus­tain­able longterm per­for­mance and growth in this im­por­tant re­gion,” he said.

He­witt added that af­ter set­tling the cap­i­tal gains tax aris­ing from the sale, Dawn in­tended to use the trans­ac­tion pro­ceeds to re­pay the group’s ex­ist­ing R200m debt with the re­main­der rein­vested in the core master dis­tri­bu­tion op­er­a­tions of the group.

He said with Dawn now be­ing debt free, it would give them the time and op­por­tu­nity to ex­e­cute their re­struc­tur­ing and turn­around plan with­out any in­ter­est bur­den.

He­witt said an­other ben­e­fit of the trans­ac­tion was it would bring R300m and a global com­pany into South Africa that would be in­vest­ing more in the coun­try to cre­ate world-class man­u­fac­tur­ing ca­pac­ity for re­lated prod­ucts.

Henk Suel­mann, chief ex­ec­u­tive of GDWT, which recorded rev­enue of R1.27bn in the year to March, said the trans­ac­tion was an ex­cit­ing step for the group, be­cause it was set to evolve to be­come a key part of the global Lixil foot­print via an in­te­gra­tion process that would fea­ture in­vest­ment and strong sup­port from Ja­pan and other parts of the net­work.

Dawn shares rose 11.58 per­cent yes­ter­day to close at R1.06 on the JSE.

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