BUSINESS LIVE / 20 AUGUST 2019 - 19:04 / MUDIWA GAVAZA
Water management and technology company Sebata will sell a 55% stake in the Water Group with a further 5% stake being donated to Inzalo
On Tuesday, technology group Sebata announced the sale of a majority stake in it subsidiary the Water Group, for R388.4m to Inzalo Capital Holdings in a bid to improve its empowerment credentials.
Sebata, which specialises in servicing the public sector, sold a 55% stake in the Water Group, which comprises USC Metering and Amanzi Meters. A further 5% stake will be donated to Inzalo by Sebata.
The deal will boost Sebata’s broad-based BEE (B-BBEE) ratings and create shareholder value, it said.
USC is a supplier of electronic water control and pre-payment devices to water service providers. Amanzi Meters develops and manufactures plastic water meters, ball valves and meter boxes for water management reticulation.
Inzalo has about two years to pay this amount, subject to a condition whereby the Water Group has to achieve a “combined net profit after tax target of R165m, based on the finalised management accounts of USC and Amanzi as at July 31 2021”.
In the event that this does not happen, “the transaction will be terminated with neither party having any claim against the other”, Sebata said.
Any dividends received by Inzalo during that period will go towards paying the purchase consideration until the deal is fully paid up.
The two companies have until the end of November to get approval by their board of directors and shareholders.
Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER