Reunert acquires balance of Nashua Mobile
Thursday, 13 December 2001
By: TriLogy Communications
Hi-tech electronics company Reunert Limited announced that it has acquired from Metropolitan Life the remaining 4,7% of Nashua Mobile it did not already own. The acquisition, for a purchase price of R28 million, is effective from 1 December 2001. This acquisition concludes a very successful year for the group, which saw a 38% increase in profit and a 27% increase in turnover.
Nashua Mobile, which started the year as Nashua NedTel Cellular, is now a wholly owned subsidiary following the acquisition of 37,3% shares held by Nedcor and the Metropolitan stake. This mobile communications service company is the largest independent cellular service provider to the contract market, representing Vodacom, MTN and Cell C, and is well positioned to benefit from current developments.
Reunert also recently increased its stake in Siemens Telecommunications (Sietel), the leading networks supplier in Southern Africa and the current supplier of network equipment and base stations to Cell C in a US$221 million contract. Depending on Sietel's holding company Siemens (South Africa), Reunert will hold between 40% and 49% of this company. Siemens has the option to purchase 9 of the 49% shareholding after Reunert purchased Marconi 21,5% shareholding in Sietel.
"Both the Nashua Mobile and Sietel deals will enhance Reunert's earnings for financial year 2002. Much of Sietel's business is based on a huge installed base, providing a high level of annuity income that underpins earnings. We also see the elimination of the minority interests in Nashua Mobile of strategic importance to the group since the cellular telephony business is closely aligned with that of Nashua," says Reunert chief executive Gerrit Pretorius.
Several smaller acquisitions were also made during the past year. Electrical engineering subsidiary Circuit Breaker Industries made a number of small acquisitions, including the business of Mitsubishi South Africa, which enhanced its product range and expanded its geographic reach.
The office products division of Nashua continued to grow. The company acquired Royce Imaging, a manufacturer of print related consumables and is also involved in a document processing software development joint venture. "The full benefit of the Royce acquisition will start to materialise in the 2002 financial year," says Pretorius.
In excess of R100 million was invested in research and development projects the past financial year. "Focused investments in market development and product promotion will continue," says Pretorius. �We belief that much of Reunert's future growth must stem from potentially lucrative export markets, because of an already saturated local market share.� The past year exports increased by 9% to R614 million.
The group has focused its social investment on the Reunert College, where students are given the opportunity to improve their mathematics, science and English skills before proceeding to tertiary education, mainly in the engineering field. This is an area in which there is an extreme shortage of skills and already more than 500 students have passed through the college since it was founded in 1993, many of whom have been re-employed in the group. During the current year 44 pupils completed the academic advancement programme, whilst 62 students are enrolled for tertiary education.
If investors had purchased Reunert some three years ago, the dividends alone would have covered the purchase price of the shares. The company has restructured, focused and grown steadily over that period.
Reunert looks forward to another good year. Real growth is expected to continue, albeit at a slightly lower rate than in the past.