http://www.engineeringnews.co.za/article/competition-body-approves-buy-out-of-barloworldx2019s-steeltube-unit-2006-11-09

Competition body approves buy out of Barloworld’s steel-tube unit

Published 09 Nov 06        By: Nelendhre Moodley
The Competition Tribunal on Thursday unconditionally approved the management buyout (MBO) of Barloworld’s steel-tube business.

The MBO will see the senior management of Barloworld Robor and RMB Ventures acquiring joint control of Robor.

It is understood that black economic-empowerment partners, including two external partners and two staff trusts, would have a 28% shareholding of the company. Senior management will have the rest of the shareholding.

In a previoud interview with Engineering News, Barloworld Robor CEO Mike Coward said that the independent Robor would benefit from being released from cost structures associated with being part of Barloworld, including onerous corporate governance costs.

There was also a firm belief that Robor could be run at a lower cost as an owner-managed business.

The company had also said that it was also on the verge of solving the problems of the stainless steel tube business unit, which was being relocated to Isando from Chamdor, the Chamdor property having already been sold. This would mean that Robor would have four of its businesses on a single site, made up of hot-rolled steel tube, open sections, cold-rolled precision and stainless-steel business units.

“This would provide both cost and management benefits,” Coward, who has led the company for the past 15 years, pointed out.

He was confident that Robor stood to benefit significantly from the proposed government expenditure of R409-billion on public energy and transport infrastructure, which would be very positive for the business.

The company stood to benefit from power-station heat-exchanger demand, in particular, along with demand for structural-steel sections for rail coaches and wagons and the many handrailings and signboard poles and structures that will be in demand for the Gautrain railway stations.

The entire 11-member executive team, bar one who was retiring, was committed to the MBO and the 60-person senior management team had pledged support.