Deal delivers debt-free Dawn

LIXIL’s investment in SA won’t end with the R325 million purchase price. Edwin Hewitt Dawn CEO

The share price of building materials logistics group Distribution and Warehousing Network (Dawn) jumped over 21% by midday yesterday after news of a deal that will leave Dawn debt-free.

This follows a 63% drop in the share price in the year to date.

Dawn CEO Edwin Hewitt said buyer LIXIL’s investment in SA won’t end with the R325 million purchase price. The group will also bring new technology and skills to Grohe Dawn Watertech (GDWT) which will unlock growth into sub-Saharan markets.

GDWT is an investment holding company for a group of companies. The group manufactures and supplies taps, mixers, sanitary ware and related plumbing accessories, operating principally in South Africa with export customers in sub-Saharan Africa, Mauritius, the Middle East and South America.

The deal entails the sale of Dawn’s 49% stake in GDWT to LIXIL that currently holds the controlling stake for R324.5 million.

Dawn remains in its current role as master distributor of GDWT products in SA and various other African countries.

LIXIL is one of the largest global companies in the housing and building industry, Dawn stated. It’s the controlling shareholder of GDWT, and indirectly owns 51% of the GDWT shares through Grohe, an indirect wholly-owned LIXIL subsidiary.

After settling the capital gains tax arising from the sale, Dawn intends to use the transaction proceeds to repay the group’s existing R200 million debt, rendering it debt free. Hewitt said this will give it space to proceed with implementing its turnaround strategy aimed at a return to profitability.

The remaining proceeds will be reinvested in the group’s core master distribution operations, now reported as Dawn Trading under the group’s new reporting structure.

The transaction execution date is September 14 and, pending fulfilment of suspensive conditions, share transfer should take place in December.

GDWT comprises Cobra, ISCA, Libra, Vaal Sanitaryware, Apex and Exipro.