Afrimat has left the building and will soon be living like the king
A sizeable rights offer or substantial borrowings to fund Universal Coal takeover made the market edgy
The market reacted with some relief to news that building supplies and mining business Afrimat walked away from a takeover deal of Universal Coal.
Although it’s difficult to fault Afrimat’s acquisition strategy since listing 12 years ago, Universal would have been by far its biggest deal at a value of more than R2bn. The fact that Afrimat would have to pursue a sizeable rights offer or incur substantial borrowings to fund such a transaction was weighing on sentiment.
With the funding burden removed, Afrimat shareholders can now sit back and enjoy what should be a bumper trading period for the group’s iron ore mining operations...