Barloworld splashes out R40m in cash to buy Midas Paints

pretoria - barloworld, the listed diversified industrial company, has acquired midas paints for about r40 million cash.

midas, which is privately owned, trades as midas earthcote. it has two main lines of business, its high-end earthcote range of wall coatings with its 34 franchised concept stores located in premium retail locations around the country, and the midas branded paint range focused on the contractor market.

barloworld and midas have signed heads of an agreement but the deal is still subject to a due diligence process and competition authority approval. midas paints will then become part of barloworld's south african coatings operations.

andre lamprecht, a barloworld executive director and chief executive of barloworld coatings, said yesterday that although the acquisition was small, it would be earnings enhancing and the returns in the business exceeded barloworld's 8 percent real cash flow return on investment hurdle rate.

"the earthcote business, with its high-end brand and franchised concept stores, will fit well with our plascon branded offerings. it will form part of our strategy to provide consumers of premium quality wall coatings with a fully integrated lifestyle offering.

"the midas brand is already well established in the western cape contracting market, and we believe it has enormous potential to expand into the rest of the country," he said.

lamprecht said the midas brand would form a powerful platform for barloworld coatings' expansion into the contractor arena and would play an important role in the company's offering to clients, such as local authorities, which required a contracting solution with strong black economic empowerment credentials.

"this we will achieve through an enterprise development strategy of partnership with contractors from previously disadvantaged communities. should the transaction be approved by the competition authorities we intend creating a large number of painter learnerships, which will benefit not only the industry and our clients, but also society at large," he said.

lamprecht said midas would run as a separate entity within barloworld coatings, and its existing management and staff would be retained.

mike vadas, midas's chief executive, was delighted that the business was going to become part of barloworld coatings.

barloworld lost 90c to r103.40 yesterday. the diversified industrial sector gained 1.46 percent.