AECI buys stake in Malawian group
JSE-LISTED chemicals and explosives manufacturer AECI has acquired a 100 percent stake in Malawian agrochemicals, seeds and spraying equipment distributor, Farmers Organisation Limited (FOL) from Rendale Holdings.
Although AECI would not give the exact value of the transaction, it said it was worth hundreds of millions of rands as FOL had generated revenue of $14 million (R170m) in its last financial year to February. The company said that the latest acquisition was part of its growth strategy to expand its agrochemical business in Africa.
AECI executive Edwin Ludick said yesterday that AECI would use the purchase of FOL as a springboard into Malawi and other countries in southern and east Africa. He said the deal would be spearheaded by AECI subsidiary Nulandis, which was driving its growth strategy on the continent.
“FOL has been our customer for 20 years, so we have a long-standing relationship,” said Ludick, who is also the chairman of Nulandis. “This fits extremely well with Nulandis’s own growth strategy, including greater focus on the smallholder market in Africa.”
Ludick said the FOL transaction would open the door for the company to increase its foothold in Malawi, from where it could expand into other countries. “FOL is now a leader in Malawi’s commercial estate market and revenue from the smallholder market segment is increasing,” Ludick said.
AECI shares yesterday were down 0.16 percent to close at R110.39. The company said FOL would continue distributing its products on behalf of multinational producers.
AECI chief executive Mark Dytor said the drive into Africa would assist the continent to deal with its food security needs. “Africa’s need to produce more food is pressing.
“In many instances, however, crop yields are far from optimal and agrochemicals use is either inadequate or inefficient.”
“We believe our products and expertise can make a difference in this regard across all segments of the agricultural sector, including the very important smallholder market where our interface will be enhanced by the FOL acquisition,” Dytor said.
Collusion
Last year, the Competition Commission raided Akulu Marchon, a company owned by AECI. The commission searched and seized documents belonging to Akulu Marchon, as well as Investchem, amid allegations of collusion in the production and supply of surfactants products used as input materials in the manufacture of blended household detergents, cosmetics and toiletry.
The commission said these included chemicals such as sulphuric acid, ether sulphate and sodium dodecyl benzene sulphonate, which could be found in dish-washing liquids, soaps and car-cleaning products. “The commission has reasonable grounds to believe (that) from about 2003, the parties held meetings and agreed to fix the prices for surfactants and allocated customers between each other,” the commission said at the time.