Imperial Logistics, which is the subject of a R12.7bn buyout from Dubai-based DP World, has now pegged February 2022 as the date the deal will proceed, two months later than initially planned.
CEO Mohammed Akoojee said on Tuesday the additional time was to offer some flexibility and that he did not expect any issues to arise during the regulatory process. If the deal is concluded it would be among the biggest SA takeovers since Pepsico’s $1.7bn (R26bn) acquisition of Pioneer Foods in 2020. Drinks-maker Distell is in the middle of negotiations that could see it taken over by top European brewer Heineken.
“It is difficult to predict how regulatory approvals are going to go, but we are positive,” Akoojee said as the group released what could be its final annual earnings report, which showed operating profit recovered 60% in the period to end-June. The group held on to its final dividend amid the DP World deal.
The group is seeking to capitalise on its extensive network of warehouses in more than 20 countries to deliver products in Africa, a continent experiencing population growth and rising urbanisation.
DP World’s large footprint in Africa includes Senegal, Mozambique, Somaliland, Angola, Rwanda, Algeria and Egypt. It has earmarked more than $2bn for investment in coming years in new capacity in Senegal, Democratic Republic of the Congo, Angola, Somaliland and Mali.
Profit recovery
Imperial said it is benefiting from easing Covid-19 restrictions and improving volumes, but the pandemic still cost it an estimated R2.6bn in lost revenue in its 2021 year. Revenue, excluding sold-off assets, rose 13% to R52.2bn in the year to end-June, with operating profit jumping 60% to R2.33bn, the latter an estimated R346m lower than it would have been without the pandemic.
It was affected by the series of alcohol bans in SA, as well as supply-chain issues such as a global chip shortage, said Imperial, whose trucks haul everything from medicine to beer. This was offset by robust demand for commodities and a general easing of restrictions in many of its markets.
Subject to stable currencies and a steady recovery in volumes on easing restrictions, Imperial said it expects to deliver growth in revenue and operating profit for its 2022 year.
Imperial’s international logistics business saw its operating profit jump to R374m from R7m, but Akoojee said the momentum in Europe’s automotive sector slowed in the last quarter of the year, as companies began paring back production as a result of the global semiconductor chips shortage, and shipping issues such as container shortages.
Logistics Africa grew revenue 2% to R15.8bn, with operating profit rising 31% to R987m, with the group saying it had taken R200m in costs out of the business. Contract retention had improved, helping Imperial lift its rate of retention to 88%, from 80% the prior year.
“It’s a very competitive market, so we are very pleased to have done that,” he said.
Aeon Asset Management portfolio manager Zaid Paruk said there were no big surprises in the results, and investors are now firmly focused on the potential delisting of the company in February.
“The current competitive environment is very tough with extreme pressure on margins as firms all fight for the same piece of the pie,” he said.
In afternoon trade on Tuesday Imperial’s shares were trading 0.81% higher at R63.31, having risen about 8% since the beginning of 2020.
The share rose almost a third since the DP World deal was first announced in July, trading at R62.80 by Monday’s close. The bid valued the company at R66 per share.
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