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Anglo to sell off subsidiary

ANGLO American intends to sell its Boart Longyear subsidiary to a global private equity company for about R3,6 billion, the resources group said on Tuesday, bringing to an end, years of uncertainty for the subsidiary.


New owner Advent International said it had already mapped out a growth strategy for Boart, which employs about 6 700 people in SA and other parts of the world.


Boart also had operations in Zimbabwe, but fell victim to a hostile operating environment that it scaled down operations significantly.


It forms part of a group of former Anglo investments, which changed hands through outright disposal or phased withdrawal.


Boart, which provides drilling services, tools and equipment for the natural resource and construction industries, contributed US$67 million in earnings before interest and tax to the Anglo American group last year.


Anglo said the sale formed part of its continuing strategy of optimising its asset base. It will use the proceeds of the sale for “general corporate purposes”.


Advent director Humphrey Battcock said firms such as Boart, which have operated as smaller divisions of larger parents, offered untapped potential.

Advent, which has invested in more than 500 companies, would introduce operating improvements.


It would also employ a three-track growth strategy that would focus on consolidating Boart’s leadership through strategic acquisitions; increasing market penetration in under-represented territories; and diversification into non-mining drilling services, Battcock said.


Anglo American earmarked Boart as a non-core operation and put it up for sale several years ago. But an improved financial performance at the subsidiary saw Anglo reverse this decision in 2002.


To remain relevant to the group, Boart had to double annual sales to $1 billion and quadruple operating profit to $100 millio by 2007.


Anglo American spokesman Daniel Ngwepe said Boart was on track to meet its profit goals but would not comment on revenue performance.

Ngwepe said that Anglo had received several offers for Boart, and chose the transaction that it felt would most maximise shareholder value. — BusinessDay/Staff Writer.

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