Afrimat at the (Universal) coalface
Construction group Afrimat, launching an offer for Universal Coal, is confident fossil fuels will still be with us for a while
Andries van Heerden isn’t given to hyperbole. So when the CEO of Afrimat — once a construction minnow, now looking like the ultimate survivor in a decimated industry — says its offer to buy Universal Coal "can be probably one of the best deals we’ve ever done", it’s worth taking notice. On Monday, Afrimat emerged as the front-runner to buy the Australian-listed company after the competing Ata consortium, which included JSE-listed mining junior Wescoal, withdrew its offer. While Van Heerden says "we see a lot of upside" in the business, the market’s reaction was somewhat telling. Wescoal, which had offered between A35c and A36c a share for Universal, rallied 6% on the news it had walked away, while Afrimat, which pitched its offer at A40c, ended flat. At R2.1bn, the price is equivalent to almost half Afrimat’s present market cap of R4.4bn, and puts Universal on a p:e of about 7. But Afrimat isn’t known for making injudicious acquisitions and Van Heerden says the Ata offer "was maybe ...
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