Afrimat pulls the plug on R2.1 billion Universal Coal deal
The company cites the size and complexity of the deal.
Afrimat, the South Africa-based industrial minerals company, has ditched its plan to takeover Universal Coal given the size and complexity of the deal.
In April, Afrimat made an offer for Universal Coal, which operates in South Africa. It offered a maximum price of A$0.40 (US27c) a share, a deal that would be worth about R2.15 billion.
At the time, Afrimat CEO Andries van Heerden said the deal could make sense as South Africa – via power utility Eskom – was set to rely on coal-fired power stations for at least another 20 years. On Wednesday, the company pulled the plug on the deal.
“Following a thorough due diligence process and extensive consideration Afrimat’s board and management has decided not to proceed with the acquisition given the size and nature of the transaction,” said the company in a statement.
This is the second time Universal Coal, which is listed in Australia but operates in South Africa’s Mpumalanga province, has been subject to a takeover only for the suitor to fail to make a final offer.
Previously, Ata Resources, a private equity firm, made a bid for Universal Coal in a consortium that included Wescoal Holdings.
Universal Coal currently produces about five million tons a year (Mt/y) of Eskom and domestic coal as well as a portion of export coal from two collieries: the 2.4Mt/y Kangala operation and New Clydesdale Colliery (NCC) which produces 2.7Mt/y. Both mines are located in South Africa’s Mpumalanga province.