Industrial group Murray & Roberts (M&R) announced on Tuesday that it has concluded an agreement to increase its stake in Gautrain operator Bombela Concession Company (BCC) to 50%.
By midday on Tuesday M&R’s share price has dropped by 1.11% to R14.31.
The R405 million transaction will increase M&R’s stake in BCC from the current level of 33%. The group said in a statement it hopes to finalise the matter before the end of the calendar year.
The transaction follows the settlement of the disputes related to the Gautrain construction late last year, after which French construction group Bouygues Travaux Publics S.A.S (Bouygues) and rolling stock supplier Bombardier Transportation UK Limited (Bombardier) indicated that they would divest from BCC. Each held 8.5% of the shares.
M&R spokesperson Ed Jardim says BCC has so far delivered a return on investment of about 18% per year. The concession period ends in 2026 and until then the investment will provide a steady income and mitigate the volatility of M&R’s contracting business, Jardim said.
M&R is also represented on the BCC board.
The group further stated that the acquisition is being undertaken as part of M&R’s broader capital allocation strategy, as the investment in BCC provides strong returns in the short to medium term, whilst the group continues to look for potential acquisitions that would complement its three operating platforms.
Once all the agreements have been signed, the implementation of the transaction will remain subject to approval from the Gauteng Management Agency, Competition Authorities, as well as approval by BCC’s funders.
After the transaction the shareholding in BCC will be: M&R 50%, empowerment group SPG 38% and Calshelf (J&J Group) 12%.
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