Two of South Africa’s larger foundries have recently become linked as a result of a recent B-BEEE deal for one and the acquisition of the other one by a private equity firm that has a 25.1% stake in the first one. Sounds confusing but it is not if you read on.
In a recent Competition Commission announcement the Commission has unconditionally approved the proposed merger whereby South African Industrial Group (Pty) Ltd (SAIG) intends to acquire South African Roll Company (Pty) Ltd (Sarco).
SAIG is owned by Medu Industrial Partnership. Medu IV GP, also going under the name of Medu Capital, has investments in Weir Minerals Africa Proprietary Limited, which provides mill circuit technology, slurry handling equipment and services and ground engaging tools to the natural resources markets. Medu IV GP also has interests in Secutel Technologies Proprietary Limited, which provides security technologies and services to the banking, telecommunications and retail industries.
Sarco has the ability to cast large engineering castings. Producing castings weighing up to 65 tons requires the foundry to have large melting capacity and the machine shop to have custom-built CNC equipment
Medu Capital is a South African-based private equity firm. Mineral solutions provider Weir Minerals Africa’s (WMA’s) South African operation, Weir Minerals South Africa (SA), is now 25.1% owned by black empowerment partner Medu Capital.
Sarco operates a steel foundry and machining operation that produces steel rolls and sleeves and are used by first-tier global steel mills in the production of flat and profiled steel. Sarco is based in Vanderbijlpark, Gauteng and services mainly the global market with considerable sales being exports. The rolls manufactured by Sarco vary in size, shape and metal composition depending on the needs of the primary target firm’s customers. Rolls are used by customers to shape heated steel into various products such as hot rolled coils or plates or profiled long products such as railway tracks, I-bars and H-bars.
Sarco has long been recognised as one of the leading international manufacturers of castings used in the steel and non-ferrous manufacturing industries. Producing castings weighing up to 65 tons requires the foundry to have large melting capacity and the machine shop to have custom-built CNC equipment. All the processes in between pouring of the metal and final machining have to match and accommodate the size and weight of the castings – no mean feat.
The Commission found that the proposed transaction is unlikely to result in a substantial prevention or lessening of competition in any relevant markets. The Commission further found that the proposed transaction does not raise any public interest concerns.
Medu Capital already had a 35% stake in Sarco having acquired the stake in 2008.