Diversified chemicals solutions company AECI has sold its food and beverage business to an South African-based private equity fund, as part of a broader effort to optimise its portfolio and focus on core operations.
The deal, which is subject to regulatory approvals, is expected to be finalised before the end of the year, the group said on Thursday.
While the purchase consideration was not disclosed, the transaction is expected to generate proceeds that will allow AECI to improve its financial performance and reduce debt.
The food and beverage business, which supplies additives, ingredients, and processing aids to the food and beverage industry, will be transferred to its new owners in its entirety, ensuring business continuity for customers and employees.
The disposal is part of AECI’s strategy to divest noncore assets and focus on its core businesses, AECI Mining and AECI Chemicals.
The company has also disposed of Schirm USA to Liberation Chem-Toll, a newly formed entity owned by Schirm USA’s senior management, for a total purchase consideration of $60m (about R1.1bn).
Schirm USA is a chemical toll manufacturer in the US, with facilities in North Texas and Southern Illinois, processing and producing chemicals for customers in various industries.
Additionally, AECI has sold assets at its Schirm Germany site in Baar-Ebenhausen to private buyers in Germany, a move expected to save about €3m in restructuring and environmental costs. The Baar-Ebenhausen facility is one of three facilities operated by Schirm Germany, which provides contract manufacturing services for agrochemicals and speciality chemicals.
AECI CEO Holger Riemensperger said the disposals are part of a broader effort to simplify and strengthen the group's portfolio, “allowing us to concentrate efforts on the sectors where we have strong market positions and exciting opportunities for international expansion”.
“We committed to using proceeds from the sale of our noncore business to reduce debt and reinvest into our core business,” said Riemensperger.
“With the reduction in our group debt, following the divestment of Much Asphalt and taking into account our current business performance, we are comfortable with our debt levels and have begun exploring inorganic growth opportunities for our business.”
In March, AECI sold its public water business, run by its Improchem subsidiary, to a majority black-owned SA special purpose vehicle. The unit, which supplied water treatment chemicals and services mainly to the public sector across Africa, was transferred along with existing partnerships.
The company’s share price rose more than 6% to R103.88 by 3.40pm on the JSE.
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