ENGINEERING: Metal Men Make Another Cape Acquisition
Recent Western Cape Business News
METALS trading specialist Insimbi appears to have taken a liking to Cape-based companies, making its second significant acquisition in the region last month.
Insimbi, which trades in a variety of metals and commodities, has bought Metlite Alloys and Metlite Alloy Properties for R11 million from John Magner and John Reid.
It looks like a good deal for Insimbi, and follows last year’s inspired acquisition of Cape-based Global Materials SA (GMSA).
Metlite has been in operation for more than 20 years and its core business is manufacturing various high quality aluminium alloys.
The company’s facilities produce aluminium alloy ingot and aluminium de-oxidant, operating mainly as a second tier supplier to many of the major automotive component manufacturers in SA and abroad as well as the local steel and related industries.
It seems the main reason for the acquisition is that Metlite will provide various cost efficiencies and synergies for Insimbi into its Western Cape customer base – most notably that of production and transport costs (which will obviously be greatly reduced).
Perhaps more importantly the combined entity will also provide Insimbi with greater buying power for various raw materials.
What’s even more fascinating is the admission by Insimbi that it wants to “further expand its footprint and service offerings into the Western and Eastern Cape…”
One needs to remember that Insimbi director Fred Botha told CBN last year that before Insimbi listed on the JSE the group identified a need to improve its presence in Western Cape and also improve service levels in what is considered a strategic market.
At that point he noted: “We have looked at some acquisitive opportunities in Cape Town, although we have yet to actually bed any down to pricing expectations of targets. But we are definitely on the look out to diversify in the Western Cape.”
One can only hope Metlite is as successful an acquisition as GMSA, which provided Insimbi with an immediate profit fillip in the half-year to end August 2009.
At that point the Insimbi Cape operations generated around R17 million in turnover and chipped in a useful R1.5 million in profits.
By year end February 2010, Insimbi Cape had extended its turnover to R44 million and managed a very encouraging profit of R3.6 million.
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