[South Africa] Omnia divests from Umongo Petroleum for $68.5m
Diversified chemicals company Omnia Holdings (Omnia) and minority shareholder Autumn Storm have negotiated a deal to sell a majority stake in Umongo Petroleum, a supplier of lubricant additives, base oils, process oils and chemicals as well as technical solutions to lubricant blend manufacturers in sub-Saharan Africa.
The transaction will see Orkila South Africa (Orkila) - a subsidiary of Azelis S.A. (Azelis), a global service provider in the specialty chemical and food ingredients industry, secure a 90% share in Umongo. Omnia, together with Autumn Storm, will retain a 10% shareholding, which is subject to a two-year option agreement.
Seelan Gobalsamy, CEO of Omnia said, “This is a further step in the execution of our Group’s strategy. We identified Umongo as non-core during our strategic review and while we had not actively marketed the business, we are pleased to have negotiated an attractive deal - one that is in the interest of all stakeholders. Indeed, the Umongo management team is excited about the opportunities for growth that Azelis offers. The proceeds from the transaction represent an excellent cash return and will further strengthen our capital position. It will provide additional optionality to create value for shareholders, either through capital allocation towards growth opportunities or by returning the cash to shareholders.”
Omnia, which acquired 90% of Umongo in 2017 for R637 million, will be receiving total cash proceeds expected to be approximately R1 billion upon closing, followed by additional proceeds of between R86 million and R105 million if an option on the retained 9% shareholding is exercised. An evaluation of Omnia’s balance sheet at its financial year-end in March 2022 will determine how the capital is allocated within its stated framework.
Boston Moonsamy, Umongo CEO and Director of Autumn Storm said, “We are grateful to Omnia’s leadership for supporting Umongo’s development and guiding us through the dynamic environment over the past few years. I have no doubt that Umongo will continue to reach greater heights and add further value to our customers under Azelis’ strategic guidance.”
Following consistent strategic execution which has placed Omnia in a healthy cash position, the Group is driving its ‘reset and growth’ phase of its strategy. Omnia is actively pursuing value-adding organic and inorganic growth opportunities, investing in greener technologies and focusing on relevant geographic expansion with a view to enhance Omnia’s positive impact in the world.
“We continue to pursue value accretive opportunities that provide complementary diversification to our core businesses whilst strengthening Omnia’s competitiveness and positioning,” added Gobalsamy. “I Page 2 of 3 am delighted by Omnia’s progress on our journey of sustainable growth. We have depth of talent within the Omnia family and a clear strategy taking global sector trends into account – all of which puts us in a strong position.”
The transaction is subject to conditions customary for transactions of this size and nature, including Competition Commission approval. The divestment is not subject to shareholder approval.