Barloworld delays Mongolian acquisition amid Covid-19 disruptions
Travel restrictions have hit transaction, which had been scheduled to be completed on April 1
Logistics and fleet management group Barloworld has delayed its acquisition of a Caterpillar dealer in Mongolia until October due to the Covid-19 outbreak.
The group said in February it had agreed to purchase Wagner Asia Equipment, though the group now said travel restrictions have delayed the transaction, which had been scheduled to be completed on April 1.
In terms of the sale Barloworld will acquire 100% of Wagner Asia Equipment and 49% of SGMS in the mineral-rich country for R3.252bn.
The target companies are engaged in the business of selling and distributing construction equipment, mining equipment, power systems and related goods and services in Mongolia, primarily under the Caterpillar brand.
Barloworld also warned the coronavirus is expected to further weigh on its operating environment, which had already been under pressure from weak consumer demand in SA, volatile commodity prices and depressed consumer demand.
Barloworld represents brands such as Caterpillar, Avis, Budget, Mercedes-Benz, Toyota, Volkswagen, Audi, BMW, Ford, and Mazda. The group said new vehicle sales volumes declined 1.8% in the five months to end-February.
The group said it has also experienced lower revenue and operating profit for its logistics division due to the non-renewal of low-margin contracts, reduced volumes and the early impact of Covid-19 on global freight movements.
“The Covid-19 outbreak is weighing on general sentiment, with escalating concerns over its negative impact on global growth and commodity prices,” the group said.