Struggling technology firm Altron continues to clean up its balance sheet and on Thursday announced that it is in a process to sell its cable manufacturer business to Shanghai-listed Hengtong. By Gugu Lourie
Altron said its subsidiary Powertech has entered into a binding heads of agreement with Hengtong to sell Aberdare Group.
As part of the transaction, Powertech will dispose of 75% of its shareholding in Aberdare Cables and Aberdare International will dispose of 100% of its shareholding in Aberdare Europe to Hengtong.
Alcon Marepha, CBI Electric Aberdare ATC Telecom Cables and Aberdare Cables Asia are excluded from the deal.
The purchase consideration payable by Hengtong will be based on an equity value of R1 billion for Aberdare Group. Hengtong will also assume the Aberdare Group debt which amounted to R232 million as at 31 August 2015.
Altron said in a statement that Hengtong, the fourth largest cable manufacturer in China and among the top hundred largest cable manufacturers in the world, considers the Aberdare Group an attractive platform to expand its international business in those key markets where the Aberdare Cables operates, namely South Africa, Africa and Europe.
The technology firm added that the Aberdare Group will also be provided with access to the operating experience and financial backing of Hengtong plus insight into the strategies and workings of a market leading cable manufacturer.
The Aberdare Group – which was founded in 1946 – offers cable design, product development, as well as installation support, commissioning and diagnostic testing through its Engineering Services business.
Hengtong wants to tap into Aberdare’s international manufacturing and sales sites in Portugal, Spain, Namibia and Mozambique, which currently enables it to support its customer base in South Africa, Africa, Europe and South America. The deal is subject to competition approval in South Africa and China.
Hengtong will conduct a due diligence exercise on Aberdare by not later than 31 January 2016.