African specialty chemicals company AECI on Monday announced that it is acquiring 100% of South African asphalt producer, Much Asphalt for a cash price of R2.272 billion.

Much Asphalt is South Africa’s leading asphalt producer, servicing a range of customers engaged in road construction and maintenance activities.

AECI said one of the key reasons underpinning the purchase is that Much Asphalt has a market leading position with long-established customer relationships, a robust order book and project pipeline, and a highly experienced management team.

Positive outlook for road infrastructure

Another reason cited by AECI was that the outlook for road infrastructure expenditure in South Africa is very positive.

“Spend on roads in South Africa has increased by a compound annual growth rate of 12.7% over the past six years, evidence of government’s commitment to infrastructure development. In terms of the 2017 Budget Review, government and state-owned companies plan to spend R327.7 billion on transport and logistics over the medium term,” AECI noted in a statement.

“At the same time, SANRAL’s reviewed plan is to expand its road network from about 22 000km to 25 000km, through the transfer of roads previously administered by provincial and local authorities. All this places Much Asphalt in a good position to realise its growth ambitions,” the company continued.

Building the dream

AECI Chief Executive, Mark Dytor, said that Much Asphalt has huge capability in terms of intellectual property and R&D and there is a huge opportunity to grow the business in South Africa and beyond.

“The development of road infrastructure on the continent is a prerequisite for economic growth. Given AECI’s extensive footprint, there is plenty of scope to build the business and the dream of a prosperous, thriving Africa.”

It is one of the largest acquisitions ever concluded in the 121-year history of AECI.