JSE-listed Esorfranki will sell its Esorfranki Geotechnical business to ground engineering specialist Keller Holdings for R500-million in cash.

The sale of Esorfranki Geotechnical would encompass the geotechnical business conducted by Esorfranki Construction in South Africa, the sale of shares in ten of its subsidiaries, as well as the sale of the business conducted by Esorfranki Construction in Angola and that conducted by Frankipile Mauritius International in the Indian Ocean Islands.

“The geotechnical market in South Africa, and Esorfranki’s share of that market, has been relatively flat over the last number of years. [We have] been exploring ways to increase the market share, as well as the geographical footprint, and an association with Keller Group positions the geotechnical business to grow and realise its true potential,” Esorfranki said.

The company added that given the opportunity and the purchase consideration, Esorfranki’s board considered it to be in the best interest of shareholders for the company to enter into the sales agreement.

Meanwhile, in terms of the sales agreement, Esorfranki and Esorfranki Construction have agreed to change their respective names so as not to include the word “franki”, and have undertaken to rename and rebrand their remaining businesses to exclude this word in combination with any other name.

Accordingly, the company’s directors proposed that the company revert to its original listed name of Esor.

Esorfranki and Esorfranki Construction were also subject to a 60-month restraint of trade in respect of any business services currently rendered by Esorfranki Construction’s geotechnical division and that of its sold subsidiaries, as well as the supply of any goods or products by those entities, which are similar to or sold in competition to the goods and products sold by Keller Holdings. This would, however, exclude pipe, culvert and bridge jacking products, the company stated.

The transaction was subject to approval by Esorfranki shareholders and the necessary approval being obtained from the Financial Services Commission of Mauritius.

“Esorfranki’s strategy is to maintain growth in the existing construction area of pipelines, with further expansion into selective African countries where it will have a competitive advantage, as well as the developments division, where it anticipates further growth in the social housing market, in particular.

“The civils division is being right-sized to take advantage of the anticipated government growth initiatives and is currently well-placed for work at the Kusile power station and integrated housing projects,” the company said.