November 8, 2017 / 6:29 AM / 2 years ago

South Africa's Imperial disposes of German chemicals unit in $128 million deal

JOHANNESBURG (Reuters) - South Africa’s Imperial Holdings (IPLJ.J) said on Wednesday it will sell its German chemicals unit, Schirm GmbH and related assets, to AECI (AFEJ.J) for 110.5 million euro (97.32 million pounds) as it focuses on developing its core businesses.

Imperial, which sells imported vehicles and runs a car rental agency in South Africa, has sold off assets, including a short-term insurance business as it aims to make the group less vulnerable to swings in the value of its home market’s volatile rand currency.

Under the deal, its subsidiary Imperial Chemical Logistics GmbH (ICL) will retain the customer warehousing, transportation and distribution services on sites on which Schirm operates, it said in a statement.

For a period of one year from the closing date of the transaction, Schirm will continue to have an option to acquire four warehouses at the Schirm plant in Schönebeck from ICL for a maximum of 9 million euros (7.93 million pounds).

“The specialisation and capital requirements of chemical contract manufacturing are not aligned with Imperial Logistics’ capabilities and stated objective of reducing capital intensity,” Imperial said in a statement.

“Moreover, there are limited operational or financial synergies between chemical contract manufacturing and Imperial Logistics’ other operations.”

Schirm manufactures agrochemicals, which accounts for around 80 percent of its revenue, and fine chemicals and supplies Bayer (BAYGn.DE), BASF (BASFn.DE) and Syngenta SYNN.S, among others.

The explosives and speciality chemicals firm, AECI, will pay 3.5 million euros to lease warehouse capacity at the Wolfenbuettel site to meet Schirm’s finished goods storage requirements, Imperial said.

The proceeds will be used to reduce short term debt and to invest in the expansion of the group’s core businesses.

Reporting by Nqobile Dludla; Editing by Ed Stoddard and Louise Heavens

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