Transaction heralds new dawn for distribution firm
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.