Purple Capital Ltd. has acquired a 30 percent equity stake valued at 6.35 million rand (U.S. $901,000), in Spanjaard, a fellow South African company that manufactures and distributes specialized lubricants and allied chemical products for industrial, marine, mining, consumer and automotive applications, both in Southern Africa as well as internationally.
According to a joint announcement issued by the two Johannesburg-based companies, Spanjaard will use the cash received to fund future acquisitions and other expansion opportunities. From the Spanjaard point of view, the association with Purple Capital and its major shareholders is a catalyst and a vital enabling factor in successfully enabling Spanjaard to increase its presence in international markets, Spanjaard said.
From our point of view, were a financial services organization, so this is not our regular business, Purple Capital Chief Operating Officer Craig Carter told Lube Report, adding that it has not invested in a lubricants company before. However, we see an opportunity to add value to the company, bringing our skills to the party, mainly helping them with mergers and acquisitions. We also see us helping them in streamlining their operations, particularly from a financial point of view.
Carter said Purple Capital Chairman Mark Barnes will join the Spanjaard board as a non-executive director. Hes an experienced businessman, Carter said.
Announced April 13, the acquisition is subject to confirmatory due diligence and other required approvals. According to the announcement, Spanjaard Executive Chairman Robert Spanjaard has agreed to vote all shares under his control (76.6 percent of all shares) in favor of the equity stake acquisition.
Spanjaards product range includes belt dressing, bicycle chain and linkage spray, bicycle cleaner and protector, brake cleaner and clear, dry lubricating film. The company also operates a metal powder operation that manufactures various raw materials supplied directly to manufacturers of friction materials such as brake pads, exporting the bulk of the production. It exports products to more than 30 countries.
Purple Capital makes equity investments in established companies where it expects its input of merchant banking expertise will make a major difference in the funding, growth prospects and ultimate shareholder value of the company. Under the agreement, Purple Capital will subscribe for about 2.4 million new shares in Spanjaard.