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Key Points
- The Saudi conglomerate is in advanced talks to acquire Barloworld, aiming to expand its presence in Africa.
- Barloworld’s stock jumped over 6.5% this week, driven by speculation of a possible acquisition by Zahid Group.
- Zahid Group’s potential deal with Barloworld highlights a trend of Middle Eastern investments in Africa to rival global powers.
Saudi Arabia’s Zahid Group is in advanced negotiations to acquire Barloworld Group, a leading industrial conglomerate led by South African business executive Dominic Sewela, according to sources familiar with the matter. The potential acquisition marks a significant move by the Saudi conglomerate to expand its presence in Africa.
Barloworld, a key distributor of Caterpillar equipment across Africa, has a market capitalization approaching $1 billion. While the company has confirmed that discussions are ongoing, it did not provide specifics, cautioning that a deal is not guaranteed. Both Zahid Group and Barloworld have declined to comment further on the matter.
Barloworld shares climb amid acquisition rumors
The news of Zahid Group’s interest has sparked a rise in Barloworld’s share price, which has increased by more than 6.5 percent this week on the Johannesburg Stock Exchange (JSE), boosting its market capitalization to R18.16 billion ($985 million). If the acquisition proceeds, there is speculation that Barloworld could be taken private and delisted from the JSE.
Zahid Group, a major player in the Middle Eastern heavy equipment distribution market, currently holds an 18.9-percent stake in Barloworld through its subsidiary, Zahid Tractor and Heavy Machinery Co. This potential deal underscores a growing trend of Middle Eastern firms targeting African investments to compete with global powers like China and France.
Company overview and Dominic Sewela’s stake
Barloworld, headquartered in Sandton, South Africa, has a long history of operations in several African countries, including Zambia, the Democratic Republic of Congo, Malawi, Angola, and South Africa. The company reported a 5.5-percent decline in revenue for the first five months of its 2024 fiscal year, totaling R15.6 billion ($827.67 million).
Dominic Sewela, CEO of Barloworld, holds a 0.23-percent minority stake in the company, valued at over $2 million. Sewela remains one of South Africa’s most affluent business leaders, and his continued investment in Barloworld underscores his commitment to the company’s future success.
