Bid­vest ac­quires Noo­nan for €175m

The Star Early Edition - - BUSINESS REPORT - Sandile Mchunu

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.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.