Sasol to acquire Condea

Dec 10, 2000 01:00 AM

Fuel and chemicals company Sasol has won its bid to acquire Condea, the chemicals subsidiary of Germany's largest power utility, RWE-DEA. In a notice, Sasol says it will pay euro 1,3 bn in cash for Condea, considerably lower than early estimates. Sasol will finance the deal with its own cash resources and foreign bank debt.
Sasol's main rival in the bid is a joint effort by the US private equity firms Kohlberg Kravis Roberts and Bain Capital.
The acquisition will substantially increase Sasol's foreign income from 10 % to about 35 %. However, the acquisition is expected to dilute Sasol's earnings a share for the first two years, after which it is expected to increase earnings a share.
Sasol says the deal will enable it to achieve several of its strategic goals, including the expansion of its chemicals portfolio, which will be a hedge against oil-price movements. The deal will also result in synergies valued at euro 150 m by providing access to technologies, marketing opportunities for Sasol products and the optimisation of logistics and of corporate services.

Condea is active in North American and European surfactant markets. Surfactants lower the surface tension of liquids, letting them foam, and are used in detergent compounds.
For the year to June 30, Condea's pre-tax earnings came to euro 114 mm on a turnover of euro 2,4 bn. Analysts say its margins were under pressure due to rising oil prices and euro weakness during the reporting period.
The parties must obtain competition clearance from the European Union Commission, and Sasol must obtain approval from the Reserve Bank to consummate the acquisition.

Source: BDFM Publishers
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