Acquisition of Malawi Chemicals Distributor

RNS Number : 0093I

Cambria Africa PLC

27 May 2014

 



Cambria Africa Plc

("Cambria" or the "Company")

acquisition of leading malawi chemicals distributor by Cambria's millchem investment

Cambria Africa plc, the Southern Africa focussed investment company, is pleased to announce it has executed agreements relating to the purchase of 100% of the outstanding share capital of Chemicals & Marketing Company Limited (C&M), a leading Malawi chemicals distributor, for 5,500,000 ordinary shares in Cambria.

·     C&M provides immediate national distribution coverage in Malawi, as well as decades of hands-on experience in business development, industrial marketing and sales of chemicals in the country

·     Cambria's subsidiary Millchem will through C&M have an existing customer base and product portfolio in Malawi, consistently generating orders and throughput, providing an ideal base for Millchem to expand upon

·     C&M has a strong asset base for logistics and production and also provides Millchem with new supplier relationships, a large library of formulations, as well as attractive international trade finance relationships

·     The acquisition of C&M immediately increases the scale and scope of Millchem, with all of C&M's revenue derived in Malawi, and approximately half of its revenue from entirely new, but proven and attractive product lines for Millchem

·     C&M had sales of US$ 2.5 million during calendar year 2013 with EBIT of US$ 177 thousand

The acquisition of C&M, which originally emerged out of leading British chemicals company ICI, provides a significant step forward for Millchem in its regional roll-out strategy, providing it with an immediate leading position in Malawi chemicals distribution, including national coverage through C&M's branches in Blantyre, Lilongwe, and Mzuzu.

C&M has a strong asset base for logistics and production, with its own warehouses and industrial land, ideal starting points for further development of bulk storage, de-bulking, mixing and blending; all typical value-add activities for a chemicals distributor.

C&M had sales of US$ 2.5 million during calendar year 2013, and as such provides an immediate approximate 50% growth to Millchem's top line, and had Earnings Before Interest and Tax of US$ 177,000.

The acquisition of C&M delivers significant diversification for Millchem in terms of geography as well as products and services. All of C&M's sales are generated in Malawi, with approximately half of these sales represented by product lines similar and/or complementary to Millchem's, and the other half being new and appealing additions to Millchem's product mix. The identified potential synergies include improving gross margins through enhanced sourcing, pursuing joint cost-efficiencies and adding new suppliers, product lines and value-added services.

The acquisition will allow C&M to benefit from the international frame work recently developed by Millchem, ranging from Millchem's unique accreditations from the U.S. based National Association of Chemical Distributors (NACD) and the Federation Europeene des Commerciants Chimiques (FECC), Millchem's international purchasing entities and strong ties into the international chemical distribution community, as well as from Millchem's rapidly developing scale and scope in terms of both regionalization as well as products and services.

The acquisition is subject to certain conditions precedent that have to be met before the acquisition of C&M can be completed, including the passing of a resolution to issue further shares and the Company can therefore not be certain the transaction will complete. A general meeting to put the resolution to issue further shares will be convened shortly. The Company will inform shareholders as developments occur.

Edzo Wisman, CEO of Cambria, commented: 

"We are thrilled to announce the acquisition of C&M, a transformational complement to Millchem and its regional growth strategy. Following closing of this transaction, Millchem will have immediately grown its top line over 50%, have a third of its sales in Malawi, and have more than 15% of its sales from new, attractive product lines.

"Malawi represents a significant and enticing growth opportunity for Cambria and through this acquisition of C&M we are diversifying our Millchem business into another high growth jurisdiction. This is directly in line with Cambria's strategy of building high growth, high quality regional companies."

Dumisani Chisala, Managing Director of C&M, added:

"This transaction commences a very exciting new growth phase for C&M, which with the support, resources and infrastructure of Millchem and Cambria will enable us to take better advantage of the opportunities open to us in Malawi. We at C&M are looking forward to joining Millchem and the wider Cambria team, as we look forward to building a significant Southern African regional chemical distributor, with strong ties into the international chemical distribution community."

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Contacts
Cambria Africa Plc	www.cambriaafrica.com
Ian Perkins	[phone]
Edzo Wisman	[phone]
WH Ireland Limited	www.wh-ireland.co.uk
James Joyce / Nick Field	[phone]
Peterhouse Corporate Finance Limited	www.pcorpfin.com
Charles Goodfellow / Duncan Vasey	[phone]
FTI Consulting	www.fticonsulting.com
Edward Westropp / Adam Cubbage	[phone]

About Cambria Africa Plc

Cambria Africa Plc, quoted on the AIM market of the London Stock Exchange, is a long term, active investment company, building a portfolio of investments primarily in Southern Africa.

For further information please visit the Company's website: www.cambriaafrica.com 

 

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