Barloworld makes headway in proposed restructure of Motor Retail
Entire Motor Retail interests will be housed within NMI-DSM, with Barloworld retaining a 50% interest in the JV
Barloworld Group today announces progress in the delivery of its strategy to position itself as an industrial processing, distribution and services company through the restructure of its Motor Retail business into NMI Durban South Motors Proprietary Limited (NMI-DSM).* Once concluded, the transaction will see Barloworld's entire motor retail interests housed within NMI-DSM, with Barloworld retaining a 50% interest in the joint venture.
This strategic direction is underpinned by Barloworld's fundamental strategic levers of 'fix, optimise and grow' and is the result of a review of the Group's Automotive portfolio amidst the changing environment. It is premised on the optimal deployment of capital in the Motor Retail business supporting its key return metrics and cash flow generation targets.
Commenting on the proposed transaction, Barloworld CEO Dominic Sewela said: "Today's announcement is important as it demonstrates our continued actions to ensure stakeholders derive value from the business as we deliver on our strategy. This is a logical next step for the motor retail business as shareholders have benefitted from our ongoing partnership with the Akoo Family (JV) in NMI-DSM. Through their hands on and entrepreneurial approach, the JV, has delivered consistent earnings over the years.
He adds: The proposed restructure into this structure will enable us to achieve efficient capital allocation while providing for a focused Motor Retail business platform in the South African market."
The transaction excludes Digital Disposal Solutions unit which includes Salvage Management and Disposal ("SMD") and the Group's TradersOnline platform
Under the terms of the transaction the disposal consideration of the business is estimated at R947 264 000, R547 264 000 of which will be paid on or about the closing date while R400 000 000.00 for goodwill will be paid in three tranches over the next two years. The final purchase consideration will be determined using the net assets at the closing date. The transaction remains subject to the achievement or waiver of certain conditions precedent and is anticipated to be concluded on or around 1 June 2021.