Imperial Logistics, whose trucks haul everything from fuel to beer, has agreed to sell its South American shipping business for $90m (R1.3bn) as it continues a strategic drive of increasingly focusing on Africa.
The sale follows that of Imperial's European shipping business for R3.44bn in July 2020, with the group cutting back on its international businesses as it seeks to create a streamlined, Africa-focused group.
The sales figure represents the maximum enterprise value on Imperial’s stake in the business, with the agreement also including an earn-out component, with a maximum purchase price of $100m. The earn-out component depends on water levels over a four-year period.
The business brought in R522m of revenue in Imperial’s six months to end-December, or 2% of group revenue.
Imperial entered into the South American market in 2014. The business has a fleet of more than 90 owned vessels and moves about 1.6-million tonnes of diversified products annually, employing about 150 staff.
The buyer, Hidrovias do Brasil, is well positioned to operate the business sustainably, based on long-standing customer relationships and an experienced and motivated workforce, said Imperial group CEO Mohammed Akoojee.
“We believe that this is the most suitable home for the South American shipping business and its people,” Akoojee said.
Imperial is in a drive to transform from “a portfolio of regional businesses to an integrated, end-to-end logistics and market access business that is focused on Africa, leveraging its scale, competitive advantages and capabilities in the healthcare, consumer, chemicals, automotive and industrial and commodities industries.”
Although it is realigning its international business to support its focus on Africa, Imperial will also consider acquisitions in other emerging and selected emerging markets that support trade flows into and out of the continent.
The proceeds from the sale of the South American business will be used to pay down debt, and for investments in the growth of the business.
The group, valued at R9.73bn on the JSE, had net debt of R5.5bn at end-December, excluding lease obligations.
In spite of Covid-19, Imperial has said it is seeing a recovery in the markets in which it operates, and has forecast double-digit operating profit and revenue growth in its year to end-June.
The group also remains acquisitive, and announced in February it had acquired 60% of e-commerce logistics business, ParcelNinja, for an undisclosed amount.
ParcelNinja offers an outsourced warehousing and fulfilment business to SA online shops.
In afternoon trade on Monday, Imperial’s share was up 2.97% to R49.56, having risen almost a third so far in 2021.
Update: April 19 2021
The article has been updated with additional information throughout.
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