JSE-listed Jasco is acquiring a 65.4% stake in Cross Fire in a R52.3-million deal with Cross Fire management and its Cross Fire founder John Cross.
The addition of Cross Fire will bolster Jasco’s existing fire solutions portfolio in the blue-chip corporate market and lift it into the top three suppliers status of fire detection, suppression and protection solutions in various industries.
“As Jasco has restructured the group, reduced gearing to within the group’s internal range of less than 50% and is improving operating performance, the management team is executing its strategic plan of measured acquisitions that either bulk up existing business units or fill gaps in its portfolio to supplement organic growth,” the company said in an update to shareholders on Wednesday.
Jasco added that its “differentiation in the market” will be further enhanced with the addition of Cross Fire’s specialised system design and consulting capabilities to Jasco’s existing fabrication and deployment abilities, which was expected to improve margins in the fire unit.
The deal will boost the fire unit’s revenue from the current R30-million a year to in excess of R200-million and offers further opportunity for Jasco to cross-sell its portfolio to an existing blue-chip customer base and unlocks access to Cross Fire’s operations in Johannesburg, Cape Town, Durban and Accra, Ghana.
Jasco will settle the R52.3-million acquisition in tranches, with an initial payment of R20-million; a first maximum deferred payment of R16.16-million, subject to Cross Fire’s financial performance for the 15-month period ending May 31, 2017; and a second maximum deferred payment of R16.16-million, subject to Cross Fire’s financial performance for the 13-month period ended June 30, 2018.
The conclusion of the transaction is subject to the fulfilment or waiver of certain suspensive conditions, including the requisite approvals, by May 31.