Investors in Omnia are assured of one thing: high share price volatility. After a 45% fall in the price over the past 36 months that changeableness now looks set to work in the company’s favour through a potential strong price recovery.
The group, which has an annual revenue of R16bn, is actively looking for ways to reduce the volatility. A key part of its strategy is diversification.
"We have been seeking an acquisition," says Adriaan de Lange, a veteran of 14 years with Omnia, who in June succeeded Rod Humphris as CEO. The quest has met with success in the form of Umongo Petroleum. Subject to competition commission approval, Omnia will acquire a 90% stake for an initial R618.5m, and, subject to a three-year earnout, a maximum of R780m. Umongo will be slotted into Omnia’s chemicals division. It will bring with it the distribution of Chevron oil additives, base oils, oil and lubricant products in SA and sub-Saharan Africa. Ensuring that Omnia gets the full benefit of consolidating Umongo in its year to May 2018, the effective acquisition date was set as March 1 2017. Omnia’s chemicals division’s revenue dropped 7% to R3.7bn and operating profit sank 31% to R145m in the past financial year. "Our major clients are in the manufacturing sector, where activity has been flat," says De Lange. Warren Jervis, manager of the Old Mutual Mid and Small Cap Fund, sees the acqu...
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