Table of Contents
Key Points
- Zahid Group, alongside local investors, has made a $1.3 billion bid to acquire South Africa’s Barloworld Group, offering a 30% premium on share price.
- The deal proposes $6.8 per share, a 30% premium, but Barloworld’s board faces opposition from key shareholders over the offer’s valuation.
- Zahid’s bid aligns with Africa’s growing construction sector, with significant investments from Middle Eastern companies like ACWA Power and DP World.
Saudi Arabia’s Zahid Group, in partnership with local investors, has made a bold $1.3 billion offer to acquire Barloworld Group, a leading industrial conglomerate, led by South African business executive Dominic Sewela.
The deal, valued at R22.8 billion ($1.3 billion), underscores Zahid’s aggressive push to capitalize on Africa’s infrastructure boom amid global interest in the continent’s construction sector.
The offer, tabled through Zahid’s Gulf Falcon Holding Ltd. and Entsha Ltd., a firm co-owned by Barloworld CEO Dominic Sewela, proposes R120 ($6.8) per share—a 30 percent premium on Tuesday’s closing price.
The bid, announced in November if successful, Barloworld would delist from the Johannesburg Stock Exchange (JSE), marking a strategic shift in its ownership structure. However, Barloworld is committed to paying investors a R3.10 ($0.17) per share dividend declared last month.
Zahid Group targets African infrastructure growth
The acquisition bid aligns with Zahid’s long-term focus on Africa’s growth potential. Africa’s construction sector is forecast to expand by 27 percent by 2029, driven by large-scale public and private investments, according to Mordor Intelligence.
In South Africa alone, President Cyril Ramaphosa has outlined a R4.8 trillion ($271.92 billion) infrastructure funding agenda to accelerate economic recovery.
Middle Eastern companies have been stepping up investments across Africa. Zahid’s move follows ACWA Power’s $10 billion commitment to South Africa’s renewable energy and DP World’s expansion of port operations across the continent.
Zahid Group began buying Barloworld shares in 2019, acquiring an 18.9 percent stake. In February, the Saudi group approached the company’s board in August after Barloworld shares fell over 25 percent, weighed down by pandemic-related headwinds.
Silchester calls offer inadequate for Barloworld
Barloworld, headquartered in Sandton, South Africa, is the exclusive Caterpillar dealer in several African nations, including Zambia, Angola, and the Democratic Republic of Congo. However, its revenue has struggled, declining 6.93 percent to R41.91 billion in the fiscal year ending Sept. 30, 2024, due to weaker equipment sales in Southern Africa.
Despite the offer’s premium, key shareholders remain unconvinced. Silchester International Investors, which holds an 18 percent stake, has called the bid inadequate, suggesting a fair valuation of no less than R130 ($7.36) per share. “A full privatization is unlikely without primary shareholder support,” Silchester said in a statement.
