Metair acquires 25% of Kenyan battery maker

June 28, 2016

Metair has acquired a 25 percent shareholding in Kenya-based private company Associated Battery Manufacturers East Africa (Abmeal), east Africa’s largest battery and solar-power manufacturer, and its subsidiaries for $7.3 million (R112.9m).

The acquisition follows Theo Loock, the managing director of the JSE-listed international manufacturer, distributors and retailers of energy storage solutions and automotive components, confirming last year the group was investigating 11 expansion project opportunities, including two joint ventures in Africa.

Loock said at the time the group was exploring a vehicle battery manufacturing and distribution joint venture in Kenya and a battery distribution joint venture in north Africa that would cover Algeria, Morocco, Egypt and the Middle East.

Renewable energy
But Loock declined to put any timeframe on the possible transactions, saying they would “happen in their own time”.
Loock said yesterday that the Abmeal transaction ticked critical boxes for Metair because it expanded the group’s capabilities in the renewable energy field, which was a key growth area of Metair energy storage business globally.

“Abmeal’s solar business is particularly exciting and we believe there are significant synergies to explore,” he said.

Metair has set itself the goal of becoming a global leader in its field and increasing the number of batteries it produces annually from 7.2 million to 50 million within the next five years and to be a global manufacturer by having a presence on each of the major continents.

Metair said the transaction with Abmeal expanded the group’s global reach and renewable energy product offering; included high-growth solar energy business with expansion opportunities; enabled African growth supported by strong relationships and regional expertise; and supported Metair’s balancing strategy with exposure to aftermarket.

Metair’s strategy is to derive 50 percent of its business from original equipment manufacturers (OEMs) and 50 percent from the aftermarket, with batteries making up half of its overall business.

Abmeal was established in 1963 and is the largest lead acid battery manufacturer in east and central Africa, with a 60 percent market share in Kenya and a total production capacity of about 1 million batteries a year. Its primary business is the manufacture of batteries under the Chloride Exide brand, which Metair owns in South Africa.

Loock said Kenya, as a manufacturing destination, formed part of the Common Market for Eastern and Southern Africa, which provided Metair with access to new markets.

Solinc, one of Abmeal’s subsidiary companies, specialises in the manufacture of solar panels, with solar panels sold and distributed with solar batteries produced by Abmeal.

Loock said this was significant in terms of Metair’s focus on energy storage and the growing need for renewable energy sources globally, adding the market for this technology in the region was growing with Solinc increasingly contributing to Abmeal’s performance.

Abmeal’s subsidiaries market, sell and distribute the batteries throughout the region, including Tanzania and Uganda, where they owned distribution centres.

Growing network
Loock said Metair looked forward to working with Abmeal’s strong management to leverage their regional network, grow other markets and strengthen business relationships, especially where automotive manufacturers had a presence.

He said the transaction importantly enabled Metair to establish a strong position in the growing east African market, which was attracting interest from a number of international market participants while Abmeal’s proximity to the north African region opened up an alternative route to supply that OEM market.

Loock said Metair’s internationally recognised intellectual property would be transferred to Abmeal over time to improve efficiencies and grow the maintenance free-battery market in east Africa.

Shares in Metair dropped 2.38 percent yesterday to close at R20.50. Source: IOL