Diversified chemicals group AECI is to dispose of its public water division, in line with its strategy to sell off noncore assets.
The transaction would be concluded through its subsidiary Improchem, it said in a statement on Monday.
Improchem has entered into a binding memorandum of agreement for the disposal of its public water business to an SA majority black-owned special purpose vehicle with Nsukutech as the controlling shareholder and Junaco as the minority shareholder.
AECI CEO Holger Riemensperger said divesting its public water division delivered on the group’s strategy to dispose of noncore assets, streamline operations and optimise its portfolio.
“It will support our capital allocation strategy and position AECI for sustainable growth and to focus on improving the performance of our core business,” he said.
The public water business is a separate division of Improchem’s water business and includes the manufacturing and supplying of water treatment chemicals, providing engineered water treatment solutions and supplying other complementary products to the public water sector.
Nsukutech specialises in the manufacture of speciality chemicals for water treatment, mineral processing and other applications, while Junaco is a Tanzanian-based company and a leading supplier of water treatment chemicals and equipment across East and Southern Africa.
Junaco has played a key role in the export of AECI’s water treatment chemicals across Africa, with a partnership that has spanned more than 15 years.
The public water business would continue to supply its direct clients and distributor network in anticipation of a smooth transition of assets, capacity and contractual opportunities to the buyer and would ensure continuity of service and supply into the public water market, once the transaction was concluded, AECI said.
The deal is conditional on the parties entering into the relevant definitive transaction agreements and the receipt of the required regulatory approvals, including competition approval.
The transaction value was not disclosed, but it was expected to fall below the threshold for categorisation in terms of the JSE listing requirements, AECI said.
Business Day reported in February when AECI released its annual results that the group was not tempted to fire sale for the four businesses it planned to dispose of, with the CEO saying the company would wait for the right offers.
The company put up several businesses — Much Asphalt, Animal Health, Schrim, Sans Fibers and Beverage — up for sale as the group reshuffled its strategy to focus on its mining and chemicals businesses.
While the group found buyers for Much Asphalt and Animal Health it has struggled to get the right price for the others.
Separately the group announced on Monday that all suspensive conditions to the Much Asphalt transaction had been fulfilled and the divestment process had been successfully concluded.
The transaction closed in line with the previously guided purchase consideration of R1.1bn, which has been transferred to AECI and will be utilised in line with the group’s capital allocation framework.
The disposal of Much Asphalt aligns with AECI’s strategy of optimising its portfolio and creating a platform for growth. The company is focusing on its core businesses, namely mining and chemicals, while divesting from managed businesses that offer limited synergies with its core businesses.
This strategic shift aimed to streamline operations, enhance efficiency and leverage in-house expertise by concentrating efforts on areas where AECI had a competitive advantage and strong market potential, the group said.
In the past year AECI has pinned its hopes on its mining unit, in which the group provides chemical solutions across the mining value chain, from explosives to tailings treatment, as the key catalyst for its growth ambitions.
Challenging market conditions in SA and declining ammonia prices stemming from the weak price of natural gas saw the group reporting a 2.7% fall in revenue to R36.5bn for the year to end-December, while its operations were impaired by R1.1bn in that period.
The group enhanced its presence in Australia last year while gaining access to Latin American markets through a strategic Peruvian land acquisition, which will enable the construction of new explosive manufacturing plants to supply Peru’s local mining sector directly.
With Jacob Webster
*31 March 2025: This story has been updated with new information
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