Barloworld to acquire Bucyrus unit
IOL Business - May 21st 2012, 08:39
Brands management group Barloworld (BAW) issued a cautionary on Friday saying it was in negotiations with Caterpillar Global Mining LLC and some of its subsidiaries for the acquisition of the Bucyrus distribution businesses in certain of Barloworld's southern African Cat dealership territories.
The group cautioned that the proposed deal, if successfully concluded, could have a material effect on the price of the company's securities and that shareholders should exercise caution when dealing in the securities until a full announcement was made.
News of the proposed transaction did not come as a surprise as the group had indicated in November, following a deal between Caterpillar Inc. and Bucyrus International, that it had entered into preliminary discussions with Caterpillar with a view to the possible acquisition of Bucyrus distribution rights and assets in Barloworld's existing dealership territories.
“We are still in the early stages of this process and are not in a position to estimate with any accuracy how this could affect our future cash flows and profitability,” Barloworld said at the time.
It added that he proposed deal represented a “really good long-term opportunity”, which would give the group a substantial entry into underground mining market in Siberia, particularly in coal. It said it hoped to finalise that transaction in the course of 2012.
Barloworld will be releasing its interim results to the end of March on Monday, which are expected to be substantially higher. In a recent trading update, the group said it had continued its strong performance for the half year, with headline earnings per share (HEPS) expected to be 65% to 75% higher than the comparable earnings of last year.
“Operating results in equipment southern Africa and Russia for the six months were strongly up driven mainly by demand in the mining sector. Construction activity in Angola has continued to improve. In Iberia trading conditions remain very weak and the operating result to March included further restructuring costs to realign the cost base. The Automotive and Logistics division performed well. All business units improved their result on the prior period. The Handling division continued its year on year trading improvement but after currency impact operating profits were flat,” the group stated.
Basic earnings per share are expected to be 15% to 25% higher than last year's comparable earnings, which is lower than the growth in HEPS, due mainly to exceptional gains in the prior year. The increased trading activity in most of our regions has led to higher working capital and net interest-bearing debt, but management remains within its target ranges. - I-Net Bridge
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