Saudi giant to buy major South African company

A unit of Saudi Arabia’s Zahid Group and its local partners offered to buy all shares in South Africa’s Barloworld Ltd. 

A group that includes Gulf Falcon Holding Ltd. — a wholly owned unit of Zahid — and Entsha Ltd., an entity linked to Barloworld Chief Executive Officer Dominic Sewela, has made an offer of 120 rand per share, Barloworld said in a statement Wednesday.

The stock surged as much as 19% in Johannesburg. 

The offer won’t be reduced by the 3.10 rand dividend the firm declared on Nov. 22, which takes the total so-called “value unlock” to 123.10 rand per share.

This translates into an 87% premium to Barloworld’s 30-day volume-weighted average price before it told shareholders to exercise caution in trading in April. 

“Zahid Group is a long-term shareholder of Barloworld and believes in the fundamental strengths of Barloworld,” the company said.

The Johannesburg-based firm that is the African distributor of Caterpillar Inc. equipment (a leading manufacturer of construction and mining equipment) will be taken private if the deal goes ahead, it said.

Middle Eastern firms have increasingly sought investments in Africa, jockeying for influence with established players like China and France. ACWA Power, a Riyadh-based company, has signed a memorandum of understanding to invest $10 billion in South Africa’s renewable-energy industry over the next decade, while Dubai-based logistics company DP World operates nine ports on the continent.

The Saudi group, a distributor of heavy equipment machinery, started buying Barloworld shares four years ago. Zahid Tractor and Heavy Machinery Co., owns 18.9% of the South African company.

Barloworld is the official Caterpillar dealer in several African nations including Zambia, the Democratic Republic of Congo, Malawi, Angola and South Africa. It also has a business in Russia that’s been subject to an internal investigation into possible export violations.

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