South African construction and engineering company Basil Read on Tuesday announced it would sell TWP Holdings to WorleyParsons for R900-million in cash – a move which CEO Marius Heyns said would allow the group to concentrate on its core business and sharpen its focus on special projects.
The deal excludes Basil Read Matomo Projects, TWP Investments and LYT Architecture, formerly known as TPS.P Architects, which would all continue to operate as wholly owned subsidiaries of Basil Read.
Heyns said Basil Read’s three-year ownership of TWP was significantly beneficial but that the offer could not be ignored. “We believe the transaction creates value for our shareholders and fits perfectly into our evolving strategy of increased focus on engineering, procurement and construction [EPC] business.”
Basil Read would pursue its growth into value-added EPC services through its continued ownership of Basil Read Matomo, which would lead the growth strategy of the group’s current focus in the energy and renewable-energy sectors, among others.
“We have submitted bids in a lot of the energy projects and quite a few mining-related projects as well,” Heyns said.
He stated that the three businesses staying behind in the Basil Read group would contribute about 40% of the revenue and the profits that TWP would have contributed.
Heyns also pointed out that Basil Read had a project pipeline of close to R5-billion. With an order book in excess of R1-billion in terms of pipeline projects, Basil Read Matoma was forecast to achieve about R600-million turnover next year.
The agreement with WorleyParsons made provision for TWP executives who were currently seconded to Basil Read Matomo projects to complete projects on arms-length terms.
The agreement also allowed for Basil Read Matomo to provide EPC management services within the scope of its existing activities and consistent with its growth strategy.
The purchase consideration was payable in cash on the implementation date of the proposed transaction, which was subject to the fulfilment of a number of conditions precedent, including approval from the Competition Commission and Basil Read shareholders.
Heyns said the deal was expected to be implemented by the end of February or early March next year.