Engineering and construction group Murray & Roberts (M&R) announced on Tuesday that it had entered into a R314-million agreement to sell eight of its infrastructure and building divisions to a black-empowered entity, Firefly Investments, led by the Southern Palace Group.
The transaction is subject to several conditions, including a written undertaking from the CIDB that it will not pursue civil claims arising from a 2013 collusion settlement. Competition authority and shareholder approvals also remain outstanding, but the participants are optimistic that the deal will be consummated during the first few months of 2017.
The eight divisions, collectedly referred to as MRIB, have been identified as M&R Buildings Gauteng, M&R Western Cape, M&R Infrastructure, M&R Botswana, M&R Plant, M&R Developments, Concor OpencastMining, Dynamic ConcreteSolutions (Namibia) and M&R’s share in the Medupi Civils Joint Venture.
M&R’s interests in the Bombela Concession Company, the Bombela Civils Joint Venture, Bombela Operating Company and M&R Middle East have been excluded, along with liabilities for certain contracts, including those relating to the Grayston Pedestrian Bridge temporary works collapse, as well as the opencastmining contract with Lonmin.
Some of the businesses being sold have been in operation for more than a century and all management and staff employed at the eight units will move across to the new entity, which will be led by MRIB CEO Jerome Govender. The new entity is expected to have an immediate order book of R4-billion, and employ up to 2 000 people.
At the closing date of the transaction, the divisions will be bundled into Concor and implemented by way of M&R disposing of the entire issued ordinary share capital of Concor, together with all claims held against Concor, to Firefly Investments.
Besides Southern Palace Group of Companies, which is a wholly black-owned and managed industrial holding company, Firefly Investments represents a consortium that includes certain members of current MRIB management and the Government Employees Pension Fund (GEPF), which is administered by the Public Investment Corporation (PIC).
Southern Palace CEO Lucas Tseki described the acquisition as a key step in its strategy of moving beyond investment holding into operations.
“This transaction is about M&R exiting a specific market sector,” Laas asserts, stressing that the group remains committed to South Africa and the rest of Africa, where it will continue to support private and public sector clients in its chosen market sectors.
