The board of Imperial is pleased to announce that it has entered into an agreement for the sale of its South American shipping business to Hidrovias do Brasil, an independent integrated logistics provider focused on waterways logistics services in Latin America.
The closing date of the transaction, 16 April 2021, comes after the successful conclusion of the sale of its European shipping operations in July 2020, with the assistance of BNP Paribas, which was mandated as the M&A advisor for both deals.
The agreed maximum enterprise value for the interest in the South American Operations is $90-million (approximately R1 305-million) which equates to a multiple of 9.6X FY2020 reported EBITDA. The enterprise value includes an earn-out component of up to $5-million (approximately R73-million), which is payable dependent on water levels over the four-year period, commencing on 1 January 2021.
Despite a challenging local market as a result of water shortages and a high COVID-19 infection rate in the region, an overall attractive valuation was achieved by means of competitive tension throughout the process.
“We are extremely pleased to have assisted Imperial with this strategic disposal, notwithstanding the challenging economic backdrop caused by the Covid-19 pandemic and difficult merger and acquisition conditions globally,” says Vikas Khandelwal, head of territory for BNP Paribas South Africa.
“We aim to bring value to our South African clients through our global expertise and extensive network, as seen in this deal.”
Imperial Group CEO Mohammed Akoojee adds: “The Imperial and BNP Paribas teams worked tirelessly on this transaction. The fact that it progressed within our original timeline expectations, during such extraordinary times, is testimony to the unwavering commitment of both teams and collective focus on strategic delivery.”
The deal further emphasises Imperial’s strategic intent to become a ‘One Imperial’ business and serve as the ‘Gateway to Africa’ to its clients, principals, and customers, he adds.
“We are transforming from a portfolio of regional businesses to an integrated end-to-end logistics and market access business that is focused on Africa, leveraging our scale, competitive advantages and capabilities in the healthcare, consumer, chemicals, automotive, and industrial and commodities industries. As such, we thoroughly assessed the strategic fit of our Logistics International business and decided to exit this business in a phased approach as it is non-core.”
The South American shipping business forms part of this process and follows the disposal of the European shipping business, which was concluded on 31 July 2020. The remaining freight management and contract logistics operations within the International Logistics business remain for sale and we are in the process of disposing of these, as announced at the group’s F2021 interim results on 23 February 2021.
“Hidrovias do Brasil is well positioned to operate the business sustainably based on long-standing customer relationships and a highly skilled, experienced and motivated work force,” says Akoojee. “We believe that this is the most suitable home for the South American shipping business and its people.”
“This acquisition gives us a very important operational flexibility which will allow us to complement our navigation capacity and operate in regions where we currently do not access” says Fabio Schettino, Hidrovias do Brasil CEO.
The South American shipping operations in question were also an attractive opportunity for many potential buyers approached by BNP Paribas, one of them being that these operations have a relatively low emission profile, as the goods are transported on waterways – something that resonated with BNP Paribas’ commitment to promoting climate-friendly businesses.