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Imperial inks J&J Group takeover

Karl Gernetzky gernetzkyk@businesslive.co.za

Imperial Logistics, which recently announced it had received a R12.7bn buyout offer from Dubai Ports World, says it has inked its own R4.4bn takeover deal of Africa-focused transport firm J&J Group, its biggest to date, in a transaction that would grow its fleet by about a third.

Imperial Logistics, which recently announced it had received a R12.7bn buyout offer from Dubai Ports World (DP World), says it has inked its own R4.4bn takeover deal of Africafocused transport firm J&J Group, its biggest to date, a transaction which would grow its fleet by about a third.

Among the benefits for Imperial of the potential deal are access to new high-quality clients, scale in terms of trucks and fuel procurement and presence. CEO Mohammed Akoojee told Business Day on Thursday that the biggest benefit was likely to be access to a critical trade lane to the port of Beira in Mozambique.

Founded in 1995, J&J provides end-to-end logistics services along the Beira and north-south corridors, the former road and railway network and pipeline linking Zimbabwe, Zambia, Malawi and Democratic Republic of the Congo to the Port of Beira. The north-south corridor is the road and railway network running through the DRC, Botswana, Malawi, Mozambique, Zambia, Zimbabwe and SA to Durban.

Imperial, founded in 1948 as a single car dealership in Johannesburg, has undertaken a strategic shift towards fastgrowing African markets, hoping to leverage its extensive network of warehouses in more than 20 countries.

“The biggest strategic add-on for us is access to a trade lane to Beira,” said Akoojee, adding the group hoped to also leverage its existing capabilities for the new clients the deal would bring.

Another benefit could be the deployment of the proprietary IT systems J&J had built over time to other parts of Imperial’s business.

The J&J Group’s core business is cross-border trucking, hauling fertiliser, agricultural products, mining-related products and general cargo. It has about 1,700 trucks, while Imperial had a vehicle fleet of more than 5,000 at its 2020 year-end, with this figure including thirdparty vehicles.

J&J generated $49.2m (R718.6m) in core profit for its year to end-December, while in the past two reported financial years Imperial has generated more than R4bn in core profit from continuing operations.

Imperial is cash flush and has been boosted by R4.7bn in proceeds from the sale of its European and South American shipping businesses, which it sees as noncore due to its strategic focus in Africa. In a trading update for its year ending June 2021, Imperial indicated its debt pile could more than double before it breached lenders’ covenants.

Imperial said the J&J management team collectively had 95 years of industry experience in transportation services in complex African markets, while the controlling shareholders of J&J, Carlyle Group and Ethos Private Equity, also said the two businesses are complementary.

“This combination offers existing and potential J&J clients a true gateway to Africa,” the private equity firms said in a statement.

Imperial says it has permission for the potential transaction from DP World, which moves one in 10 of the world’s containers, and which has made an offer that represents a 39.5% premium to Imperial’s share price on July 7. The transaction will not result in any amendment to the terms of the DP World offer, it said.

Since the offer became public, Imperial’s shares have surged by about a third, giving the group a market value of R12.5bn.

In afternoon trade on Thursday Imperial’s shares were up 1.09% to R61.97, having risen by almost two-thirds so far in 2021, and 5% since the start of 2020.

IMPERIAL, FOUNDED IN 1948, HAS UNDERTAKEN A STRATEGIC SHIFT TOWARDS FASTGROWING AFRICAN MARKETS

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2021-07-30T07:00:00.0000000Z

2021-07-30T07:00:00.0000000Z

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