AltX-listed construction company Erbacon Investment Holdings has acquired Gauteng civil engineering company Civcontract Civils (Civcon) for R267-million, while simultaneously entering into a black economic-empowerment (BEE) deal with a black-owned private equity company.

KwaZulu-Natal-based Erbacon would pay an initial R95-million in cash to acquire the Gauteng business, while the balance of payment would be a phased issuing of Erbacon shares to the vendors of Civcon at an issue price of 168c a share.

Both companies would also distribute a dividend to existing shareholders, before the effective date of the transaction, with R30-million to be distributed to Erbacon shareholders and R25-million in favour of the current Civcon shareholders.

“This transaction projects us into a bigger league of construction firms in South Africa. At the same time, it gives us greater access to the Gauteng construction industry and strong diversification into the private civil engineering sector where Civcon has been active in the mining and heavy industry sector for the past 28 years,” Erbacon CEO Dave Erskine noted in a statement.

The construction company has already expanded its footprint into the Eastern Cape and Mpumalanga provinces. It would now also be able to contract in Gauteng, North West province, Limpopo province, the Northern Cape and in neighbouring African countries, the company stated.

Its projected forward order book to February 2010, post the transaction with Civcon, would be about R1,3-billion, said Erskine.

Meanwhile, Erbacon has invited black-owned private equity company, Medu Capital Fund, to acquire a 29,4% stake in Erbacon, at a purchase price of 168c a share to help it fund the Civcon transaction.

The BEE deal, which would allow the AltX-listed company to tender more competitively on larger construction projects, was expected to raise about R113-million for Erbacon.