CHEMICALS and explosives company AECI has bought Chemical & Monitoring Solutions, General Electric's water treatment business in Africa, for $20m, AECI said on Thursday.
The acquisition will be merged into AECI's wholly owned subsidiary ImproChem, which is at the forefront of AECI's drive to be a leading supplier of speciality water-treatment chemicals and services in Africa.
ImproChem stands to benefit from GE's technology and expects to enhance its footprint in the water-treatment market.
On Thursday, AECI said the acquisition, which the Competition Commission had already approved, covered all African countries except Algeria, Egypt, Libya, Morocco, Tunisia and the Indian Ocean islands of Madagascar, Mauritius, Réunion and the Seychelles.
AECI spokeswoman Fulvia Putero said the North African countries excluded from the deal were supplied out of Europe.
ImproChem's customers are mainly involved in mining, municipal water treatment, food and beverages, and oil and refining.
"(ImproChem) already has a well-established footprint in Africa, and the agreement with GE will ensure that customers covered by the acquisition, where water is often a scarce resource, continue to have access to the most advanced technologies that enhance the efficiencies of their operations while reducing operating costs," AECI said.
In addition to AECI's acquisition of Chemical & Monitoring Solutions, AECI and GE have also agreed on an exclusive distribution and licensing arrangement that still gives GE direct involvement in Chemical & Monitoring Solutions.
"As part of the acquisition agreement, ImproChem will produce chemical products using GE formulations at its Umbogintwini plant (south of Durban). GE will also have the right to consider forming a joint venture with ImproChem in the future," AECI said.
The acquisition, which is effective from next month, follows last year's non-exclusive distribution arrangement between GE and ImproChem.
AECI expects a fall of more than 20% in earnings for the six months to June 30. It attributes the drop to, among others, the effect of black economic empowerment transactions in the first half of the financial year and volatility in mining and manufacturing production.