Murray & Roberts sale of unit 'on track'

Murray & Roberts CEO Henry Laas said in June that it wanted to be the leading diversified engineering and construction group in selected emerging markets by 2020.

JSE-listed construction and engineering firm Murray & Roberts said last week that all conditions for the disposal of its Construction Products Africa subsidiary had been met.

The unit consists of companies that supply goods such as asphalt, manufactured concrete products and clay bricks.

The transaction is effective from October 31, with R1.15bn of the R1.325bn total sale price to be received on this date. The group says negotiations for the sale of its remaining Hall Longmore business — which makes large-bore welded steel pipes, piling and structural steel — are continuing.

Murray said in June that it was “very pleased” with the value achieved through the Construction Products Africa disposal. It said there was a limited strategic fit between these businesses and the group’s growth aspirations in engineering and construction.

Divesting from the manufacturing businesses also allowed it to reduce debt on its South African balance sheet and invest in markets that had the “best long-term financial growth potential to shareholders”.

The disposals followed the sale of its steel business last year and that of the Union Carriage & Wagon rolling stock manufacturer early this year.

In November, it will add Mozambique to the list of African countries where it has a permanent presence. This follows the recent opening of operations in Ghana and Zambia.

Expansion in Africa forms part of Murray & Roberts’s long-term growth plan. CEO Henry Laas said in June that it wanted to be the leading diversified engineering and construction group in selected emerging markets by 2020. To this end, it was consolidating operations to take advantage of core global and African growth areas, including mining, energy, oil and gas, infrastructure and building.

Group communications executive Ed Jardim said on Friday that the group’s Africa strategy was not linked to the Construction Products Africa disposal. “We see opportunity in Africa and have adopted a hub and spoke approach with our bases in Ghana, Zambia and Kenya. Mozambique was added due to the possible opportunity of the coast,” he said.

The group also has a 61.6% shareholding in Australian engineering and construction group Clough. It recently announced its aim to buy the rest of Clough, to leverage oil and gas opportunities in Africa.

“The market is still a little flat locally, thus we are investing in our international operations (such as) Clough,” Mr Jardim said.

A general meeting to vote on the Clough shareholding would be held on November 6. Clough shareholders would vote on November 15.

But Murray & Roberts said this would not dilute its presence in SA, where it saw growth in the oil, gas and energy sectors, and opportunity in the government’s R4-trillion infrastructure plan over 15 years.

Mr Jardim also said the group had not discussed the possibility of a secondary listing.