Imperial Logistics to sell European shipping business for R3.64bn

JSE-listed African and European logistics provider Imperial Logistics has agreed to dispose of its European shipping business to German-based Häfen und Güterverkehr Köln AG for R3.64 billion.

The proposed transaction is in line with Imperial Logistics’s core strategic focus to grow its African footprint and align its international portfolio to position the group as the “gateway to Africa” in the medium- to long term.

Imperial Logistics announced the proposed transaction on Monday. It is still subject to a number of conditions precedent being fulfilled or waived, including approval from the relevant competition authorities.

An analyst who did not want to be named said that it looks like Imperial got a good price for the business but “the trick is how they redeploy the capital”.

Integrated offering

The group said the alignment of its international portfolio to its core strategic focus will result in Imperial having an integrated logistics and market access offering, focused on Africa, which leverages its competitive advantages and capabilities mainly in the healthcare, consumer, chemicals, industrial and automotive industry verticals.

It said this strategy includes investing in new areas that enhance its African growth vision. It will explore growth opportunities in other emerging and selected developed markets based on the relevance of its capabilities, scale, benefits and client relationships that support trade flows into and out of Africa – including the potential expansion into international freight management.

The shipping business was identified as being non-core to the strategy of aligning its international portfolio with its new strategic direction and its core competitive advantages.

Phased disposal

The group said it has adopted a phased approach in the disposal of its shipping business and believes Häfen und Güterverkehr Köln is well positioned to operate the European shipping business sustainably based on long-standing customer relationships and a highly motivated workforce.

Its South American shipping business will continue on a stand-alone basis but remains available for sale.

Imperial Logistics chair Phumzile Langeni said in the group’s latest annual report that the its international portfolio is under review, which will result in further disposals of non-core businesses.

“These disposals will result in additional capital for us to invest in strategic acquisitions, such as investment in international freight management capabilities, which will allow us to truly be the gateway to Africa,” she said.

CEO Mohammed Akoojee said in February when the group released its interim financial results that it expected to conclude the sale process of the group’s international shipping business by June 2020 subject to regulatory approvals.

Imperial Logistics acquired the European shipping business in 1999. It is the largest inland navigation operator and active in the most important river basins and inland waterways in the region.

The business has a fleet of more than 400 owned, leased and chartered vessels, moves about 45 million tons of diversified products annually, and employs about 910 staff.

It generated €350.8 million in revenue and €19.5 million in the year to end-June 2019.