SA firm in Sh730m Kenyan battery maker buyout

South African manufacturer of vehicle components Metair has bought a 25 per cent stake in Kenyan Associated Battery Manufacturers East Africa Limited (ABMEAL) and its subsidiaries at a cost of Sh730 million ($7.3 million).

Metair, which is listed on the Johannesburg Stock Exchange (JSE), Monday said the investment will give it a strategic foothold in the East African region.

“This transaction ticked critical boxes for us as it expands our capabilities in the renewable energy field, which is a key growth area of our energy storage business globally. ABMEAL’s solar business is particularly exciting and we believe that there are significant synergies to explore,” Metair’s managing director Theo Loock said in an interview.

Mr Loock said Kenya, as a manufacturing destination, forms part of the Common Market for Eastern and Southern Africa which provides access to new markets for Metair, noting ABMEAL’s proximity to the North African region opens up an alternative route to supply that market.

“We look forward to working with ABMEAL’s strong management to leverage their well-established regional network, grow other markets and strengthen business relationships, especially where automotive manufacturers have a presence,” said Mr Loock.

Established in 1963, ABMEAL is the largest lead acid battery manufacturer in East and Central Africa with a 60 per cent market share in Kenya and a total production capacity of about one million batteries per year.

ABMEAL’s primary business is the manufacture of batteries under the Chloride Exide brand, which Metair owns in South Africa. ABM Group Chief Executive Guy Jack said the deal was a huge win for both the Kenyan and South Africa battery makers respectively.

“We are delighted to have concluded this deal which has been several years in the making,” said Mr Jack, adding that ABMEAL would leverage on Metair’s battery technologies and manufacturing capabilities “to position ABM as a global manufacturer.”

“This partnership is strategic for both parties, with ABMEAL gaining access to Metair’s extensive experience and global technologies within the battery industry, whilst Metair benefits from an expanding footprint across Africa through an established leading organisation,” said Mr Jack.

Solinc, one of ABMEAL’s subsidiary companies, specialises in making solar panels which Mr Loock termed is significant for Metair’s focus on energy storage and the growing need for renewable energy sources globally.

Solar panels are sold and distributed with solar batteries produced by ABMEAL.

ABMEAL’s subsidiaries market, sell and distribute the batteries throughout the region, including Tanzania and Uganda, where they own distribution centres.

Metair plans to be a global manufacturer by having a presence on major continents with a 50 million batteries annual production goal. Its latest annual report reveals plans to achieve the ambitious annual production goal through acquisitions or global consolidations.

Metair acquired Rombat, a Romanian battery producer, in 2012 followed by the acquisition of Mutlu Akü, the largest battery manufacturer in Turkey a year later.

The Mutlu acquisition turned JSE-listed Metair into the third largest battery manufacturer in Europe, the Middle East and Africa. It now had three manufacturing sites in Romania, Turkey and South Africa; giving the company a production capacity of 11.7 million batteries a year.

In 2015 Metair entered the UK market when it acquired Dynamic Battery Services.

Mr Loock stressed that Metair’s strategy is to partner with local companies in various countries to leverage local knowledge and structures, “rather than establishing greenfield operations”.

Products manufactured  by Metair’s seven subsidiaries include  heating  and  cooling  systems,  shock  absorbers,  springs,  lead-acid batteries, lighting and signalling devices, plastic mouldings, wiring harnesses and front end modules.