Sasol beats rivals, buys Condea

2000-12-11 09:32

Johannesburg – Synthetic fuel producer Sasol said on Monday it would buy German utility RWE AG's Condea speciality chemicals unit for 1.295bn euros in a deal which launches the South African group into Europe.

The acquisition, which Sasol clinched ahead of rival US private equity firms Kohlberg Kravis Roberts and Bain Capital, would dilute Sasol's earnings per share for the first two years, after which it was expected to boost earnings, the company said.

It said the deal formed part of its strategy to achieve international growth through acquisitions, joint ventures and alliances particularly through its alpha olefins, solvents and polymers businesses.

"The acquisition fits well with this strategy, provides a hedge against oil price movements and will also substantially increase Sasol's foreign derived income from the present level of 10% to about 35%," Sasol Managing Director Pieter Cox said in a statement.

Sasol's share price edged up almost half a percent to R50.60 in early trade on Monday, some R10 off a year-peak of R61.30 hit in early November on the back of a surge in world oil prices and a weaker rand, which boosted export earnings.

Sasol said it would fund the acquisition, its biggest overseas buy, initially from its own cash resources and foreign bank debt.

The bank debt would be replaced with appropriate longer term finance, taking into account the Sasol Group's funding needs.

The purchase consideration was based on a net equity value of 1.11bn euros. An additional payment or refund would be made should Condea's net equity at the closing date amount to more than 1.12bn euros, Sasol said.

Sasol said Condea's surfactant interests fitted well with its own detergent alcohol business and would boost the South African firm's share of markets for detergent alcohols, linear alkyl benzene and paraffins.

Surfactants lower the surface tension of liquids and are used in detergents.

The deal, which is conditional on South African, European and US regulatory approval, is effective from July 1, 2000.