Solar Industries bids R21.8bn for Omnia at R134.50 a share

Moneyweb reports that Solar Industries India has agreed to acquire Omnia Holdings, the Johannesburg industrial explosives and fertiliser group, in a deal valued at R21,8 billion. The Moneyweb report puts the offer at R134,50 a share.

That is a 14,3% premium to the closing price on Friday, before the bid became public. Omnia’s shares jumped 15% on the JSE, taking its market value to R19,1 billion.

The buyer is a Nagpur-based explosives and defence group led by billionaire Satyanarayan Nuwal. Solar Industries already operates in South Africa through Problast BS, and has operations in Ghana, Nigeria, Tanzania and Zambia. Its own shares have climbed more than 80% this year, giving it a market value of 2,02 trillion rupees, or about $21,1 billion.

What Solar is buying

Omnia’s earnings grew 21% in the year to March, with operating profit split roughly evenly between its mining and agricultural divisions.

That split is the point. Omnia sells the explosives that platinum and gold mines use to break rock, and the fertiliser that maize and citrus farmers put in the ground. It is, in effect, a bet on two of the country’s largest export industries at once.

Solar Industries chief executive Seelan Gobalsamy framed the transaction as a growth play. In an interview on Monday, he said the deal would bring two balance sheets together to accelerate growth.

It also gives Solar access to Omnia’s plants in Canada, Brazil, Australia and Indonesia, and a route into southern African markets where the Indian group does not yet operate.

The South African read

The bid is a straightforward vote of confidence in two sectors that matter enormously here. South Africa hosts the world’s largest platinum mines and is the continent’s biggest maize producer and the biggest citrus exporter globally. A company that makes its money selling into those supply chains is not buying a distressed asset. It is buying a position.

For Omnia’s shareholders, the offer is a 14,3% premium to a price that had already been rising. For Omnia’s customers, the mines and the farms, the practical question is whether a foreign owner keeps the local manufacturing footprint and the local supply relationships intact. Nothing in the announcement suggests otherwise, and the combined group would be a larger, better capitalised supplier to both industries.

The deal would also mark another step in a pattern that has become familiar on the JSE, where strong mid-cap industrials attract overseas buyers with deeper pockets. That is not a loss in itself. Omnia’s operations, its people and its customer base stay in South Africa. What changes is where the final decisions are taken.

What happens next

Solar Industries’ existing South African presence means the transaction is not a first entry, which should simplify the competition and regulatory process. The offer still has to clear the usual approvals before it becomes binding on shareholders.

Moneyweb reported the two companies were in advanced talks before Monday’s announcement. The share price reaction shows the market expects the deal to proceed at or near the stated terms.

For a reader with money in an industrial fund or a retirement annuity tracking the JSE, the number to watch is R134,50. That is what Solar has put on the table, and it is the figure against which any competing bid or revised offer will be measured.

Source: Moneyweb. Read the original item.