German bathroom-fittings company Grohe is to spend R880-million acquiring 51% of the sanitary ware companies of JSE-listed group Distribution and Warehousing Network (Dawn), the companies announced on Wednesday.
The deal, which will see Grohe owning 51% of a new joint venture with Dawn, will make Grohe one of South Africa's leading suppliers of sanitary fittings, and give it a ready-made platform for expansion into southern and eastern Africa.
Dawn, for its part, will be able to globalise its manufacturing operations through access to Grohe's technology, expertise and global distribution networks.
Grohe Group CEO and chairperson David Haines said in a statement that Grohe was "excited to be expanding our activities in Africa's southern region.
"Dawn's position of strength in the South African market makes it the perfect partner also for the continued expansion of the Grohe and Joyou brands," Haines said, adding: "In return, the new company will benefit from our expertise in research and development, as well as design".
The new company formed by the transaction, to be named Grohe Dawn Watertech Holdings, will include the majority of Dawn's Watertech portfolio, including Cobra Watertech, Apex Valves South Africa, Exipro Manufacturing, Vaal Sanitaryware, Isca and Libra Bathrooms.
"With gross sales of around €110-million, Dawn's sanitary fittings business segment grew by approximately 10 percent in the last financial year," Grohe said. "Dawn has a significant sanitary fittings market share in South Africa, which means that Grohe becomes one of the country's leading suppliers of sanitary fittings as a result of the transaction."
The transaction is subject to approval from the regulatory authorities as well as Dawn's shareholders, and is expected to be concluded by 30 November.