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Imperial Holdings Aims for Acquisitions, May Buy Back Shares

Imperial Holdings Ltd., the South African freight-transport operator that has bought nine companies in the past year, said it plans to expand through acquisitions and may buy back more of its shares.

A debt-to-equity ratio of 34 percent, compared with the company’s target of 60 percent to 80 percent, leaves Imperial with “significant room for expansion,” the Johannesburg-based company said in a statement today. Acquisitions in the past two years have boosted sales by about 7 billion rand ($967 million).

“We have a couple of billion rand to spend on acquisitions,” Chief Executive Officer Hubert Brody said in a telephone interview today. The focus will continue to be in Africa and south of the equator, he added.

Imperial, which owns South Africa’s largest auto-dealer network and a logistics business in Germany, said on July 11 that it’s in talks to buy a company abroad, without giving details of the negotiations. The company will use its purchase of CIC Holdings Ltd., a distributor of vehicles in southern Africa, to drive its African expansion, Imperial said.

Depending on how the company progresses with acquisitions, it might consider returning more cash to investors through share buybacks, Brody said. Dividends paid in the past financial year, together with share buybacks, returned in excess of 1 billion rand to investors, he said.

Stock Declines

Imperial Holdings declined 1.3 percent to 106.99 rand as of the 5 p.m. close of trading in Johannesburg. The stock has fallen 16 percent this year, giving the company a market value of 24.8 billion rand.

“We’ll definitely add to our distribution businesses and we will increase our financial-services business,” Brody said. The financial-services division, which includes the LiquidCapital business-to-business brand, will grow through new divisions or the expansion of existing ones, Brody said.

Financial services generated operating profit of 760 million rand from in the year through June, the company said in a statement today.

Imperial reported a 38 percent increase in earnings per share before one-time items to 13.70 rand in the year, beating the 11.99 rand median estimate of nine analysts surveyed by Bloomberg News. Revenue gained 21 percent to 64.7 billion rand. The company raised its full-year dividend to 4.80 rand a share from 3.50 rand a year earlier.

The “extremely volatile and uncertain conditions” in the global economy will make it challenging for the company to achieve “meaningful” growth in fiscal 2012, Imperial said.

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