Omnia recommends disposal of Oro Agri for USD 165 million to shareholders
- Published: Monday, 19 October 2020 16:16
- Attractive offer will realise significant value for shareholders
- Proceeds to completely de-risk Omnia’s capital structure
- Dividend policy and cash surplus distribution options to be reviewed at year-end
Monday, 19 October 2020: JSE-listed Omnia Holdings Limited (“Omnia”), announced that it has reached an agreement to dispose of Oro Agri to Rovensa, a European-headquartered business which produces and distributes biocontrol, bionutrition and crop protection solutions. This follows Omnia’s announcement in June that it had received a non-binding offer which warranted further investigation.
Seelan Gobalsamy, CEO of Omnia commented: “The Board undertook a comprehensive review of Oro Agri as part of the Group’s broader strategy and has concluded to accept Rovensa’s attractive offer and recommend that shareholders approve the transaction.”
In terms of the agreement, Rovensa’s offer is based on an enterprise value of USD165 million for Oro Agri which will translate into aggregate cash proceeds to Omnia of approximately USD152 million. Omnia acquired Oro Agri in 2018 for USD100 million. The price is reflective of Rovensa having synergies with Oro Agri that Omnia does not have as well as capacity to fully fund Oro Agri’s growth plan.
“We believe that Oro Agri’s risk profile, the attractive price offered by Rovensa and the opportunity to de-risk our capital structure, outweigh Oro Agri’s long term potential which would require significant investment to realise,” added Gobalsamy.
Post-disposal, Omnia will retain a far reaching international footprint with attractive opportunities for its Agriculture International and Mining International businesses (BME), which represent approximately 20% and 50% of Omnia’s international income respectively.
Omnia’s Agriculture International business is actively growing its biostimulant, speciality nutrient and organic fertiliser coating product ranges which, together with demand for humates from Omnia’s unique Australian source, remain high. Research on microbial and other speciality plant nutrition products in South Africa is ongoing.
“Our intention is to use the proceeds from the disposal to repay debt and position Omnia with a strong financial base from which to fund selective organic expansionary capex and working capital. We will remain conservative regarding capital allocation to value accretive non-organic opportunities,” concluded Gobalsamy.
Omnia plans to review its dividend policy and this, together with decisions regarding the return of any surplus cash to shareholders, including through a special dividend and/or share buyback, will be announced with its results for the financial year ending March 2021.
The effective date of the disposal is 1 April 2020 and is subject to conditions customary for transactions of this nature including approval, by a simple majority, of shareholders at a general meeting on or about Monday, 14 December 2020. A circular is scheduled to be mailed to Omnia shareholders on or about Friday, 13 November.
Institutional shareholders representing a majority of the shares in issue currently have provided indications of support for the disposal.
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NOTES TO EDITORS:
Omnia is a diversified chemicals Group that has moved beyond chemicals to include organic solutions, specialised services, technology and integrated solutions for the agriculture, mining, and chemical application industries. Using technical innovation combined with intellectual capital, Omnia leverages the expertise of 4 426 employees to add value for customers at every stage of the supply and service chain. With its vision of leaving a Better World, the Group’s solutions promote the responsible use of its products for health, safety and a lower environmental impact, with an increasing shift towards cleaner technologies.
Omnia’s corporate office is based in Johannesburg, South Africa and its main production facility in Sasolburg, some 70 kilometres south of Johannesburg. At 31 March 2020 the Group has a physical presence in 45 countries and operations extending into the African continent, including South Africa, with additional focused operations in Australasia, Brazil, US, Europe and China.
Agriculture RSA: As part of its innovative Nutriology® concept, this segment produces and trades in granular, liquid and speciality fertilizer as well as value added services and solutions. The South African customer base includes commercial and small-scale farmers, co-operatives and other corporate clients. The business also supplies manufactured goods to Agriculture International, Mining and Chemicals.
Agriculture International: This segment produces and trades in granular, liquid and speciality fertilizers, humates – a biostimulant –as well as value-added services and solutions to a broad customer base internationally.
Agriculture Biological: This segment is involved in the research and development, production, distribution and sales of a unique range of AgriBio products, many of which are patented. The key product ranges include biostimulants, adjuvants, biological crop protection products, liquid foliar fertilizers and soil conditioners for all major crop types.
Mining RSA: This segment comprises the BME business in South Africa. The business focuses on blasting agents – bulk emulsion and blended bulk explosives – complemented by the AXXIS™ electronic detonator system and modern software that are crucial to cost-efficient and safe rock breaking. BME leverages its blasting products, equipment, accessories, services and solutions to add value to customers’ blasting operations. A part of Mining RSA’s revenue relates to the recovery of costs for services and technology. This segment also provides raw material and other supplies to Mining International.
Mining International: This segment relates to the BME businesses outside of South Africa and also includes the Protea Mining Chemicals business. The territories included here are countries in the Southern African Development Community (“SADC”), West Africa, Australia, Indonesia, USA and Canada (by way of a joint venture) and supply similar products and services to Mining RSA.
Protea Chemicals: This segment is a long-established and well-known manufacturer and distributor of specialty, functional and effect chemicals, polymers and other services and solutions. This segment relates to both the larger local part of the business and smaller international part of the business. Among the services and solutions provided are technical support (water, nutrition and personal care) and an offshore delivery to floating production storage and offloading (“FPSO”) vessels.
Umongo Petroleum: This segment supplies lubricant additives, base oils, process oils and specialty chemicals.
Oro Agri is involved in the research and development, production, distribution, marketing and sales of a differentiated range of AgriBio products, many of which are patented. Its product ranges include biological crop protection products, adjuvants, liquid foliar fertilizers and soil conditioners for all major crop types. Oro Agri owns and operates in-house production and R&D facilities in South Africa, Brazil, the United States and Europe.