Industry News

Barloworld to acquire Midas Paints

Published on 2005-09-02. Author : SpecialChem

Barloworld announced it has signed heads of agreement with the owners of Midas Paints (Pty) Limited, trading as Midas Earthcote, to acquire the company for a cash consideration of approximately R40 million.

The deal, which is subject to a due diligence process, and Competition authority approval, will see Midas become part of Barloworld's South African coatings operations.

Midas, which is privately owned, has two main lines of business - its high - end Earthcote range of wall coatings with its 34 franchised concept stores located in premium retail locations around South Africa, and the Midas branded paint range focused on the contractor market.

The acquisition, albeit small, will be earnings enhancing and the returns in the business exceed Barloworld's 8% real cash flow return on investment (CFROI) hurdle rate.

Commenting on the deal, Barloworld Executive Director and CEO of Barloworld Coatings Andre Lamprecht said: 'The Earthcote business, with its high-end brand and franchised concept stores will fit well with our Plascon branded offerings. It will form part of our strategy to provide consumers of premium quality wall coatings with a fully integrated lifestyle offering.

"The Midas brand is already well established in the Western Cape contracting market, and we believe it has enormous potential to expand into the rest of the country. It could form a powerful platform for our further expansion into the contractor arena and play an important role in our offering to clients such as local authorities who require a contracting solution with strong Black Economic Empowerment credentials. "

"This we will achieve through an enterprise development strategy of partnership with contractors from previously disadvantaged communities. Should the transaction be approved by the competition authorities we intend creating a large number of painter learnerships which will benefit not only the industry and our clients, but also society at large," he said.

Mike Vadas, CEO of Midas said: "We are delighted that the business we have built is going to become part of Barloworld Coatings. As the coatings industry leaders they have the scale and resources to build on what we have created as an innovative challenger to the more traditional coatings brands and turn it into a really powerful force shaping the future of the industry."

Midas is to be run as a separate entity within Barloworld Coatings, and existing management and staff will be retained.

Source: Barloworld

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