Business
Saudi Zahid Group to Acquire South African Giant Barloworld
In a landmark deal reflecting growing Middle Eastern interest in Africa, Saudi Arabia’s Zahid Group has teamed up with local partners to acquire South African industrial powerhouse Barloworld Ltd.
The consortium, which includes Gulf Falcon Holding Ltd. (a Zahid Group subsidiary) and Entsha Ltd., offered R120 per share, valuing the deal at a significant 87% premium to Barloworld’s 30-day average trading price before April 2024. This price includes a dividend of R3.10 per share declared by Barloworld on November 22, bringing the total value to R123.10 per share.
Market Impact
The news sparked excitement in the financial markets, with Barloworld’s stock surging 19% on the Johannesburg Stock Exchange (JSE). If successful, the acquisition will see Barloworld go private, transforming its shareholder landscape and potentially reshaping the company’s operations under Zahid Group’s stewardship.
Why This Matters
- Strategic Growth for Zahid Group:
Zahid Group, a longtime Barloworld investor with an 18.9% stake, is a leader in heavy equipment distribution. Acquiring Barloworld solidifies its position as a dominant player in the African market. - Barloworld’s Regional Footprint:
Barloworld is the exclusive distributor of Caterpillar Inc. equipment across multiple African countries, including South Africa, Zambia, Malawi, Angola, and the DRC. This deal enhances Zahid Group’s access to these lucrative markets. - Middle Eastern Investments in Africa:
This acquisition is part of a broader trend of Middle Eastern firms expanding their presence in Africa. Other notable investments include:- ACWA Power’s $10 billion commitment to South Africa’s renewable energy sector.
- DP World’s operations in nine African ports.
Challenges and Opportunities
While the acquisition bolsters Zahid Group’s influence, it comes with complexities. Barloworld’s Russian operations are under scrutiny for potential export violations, which could impact its valuation and regulatory standing.
For South Africa, the deal underscores the nation’s attractiveness to international investors, especially in sectors like mining, construction, and logistics.
A Transformative Deal
This proposed acquisition by Saudi Zahid Group represents a pivotal moment for South Africa’s industrial sector, highlighting the growing role of Middle Eastern capital in Africa’s economic narrative. With the deal poised to reshape regional dynamics, it will be closely watched by stakeholders across industries.
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