Imperial May Spend Up to 4 Billion Rand on Acquisition Hunt

Imperial Holdings Ltd., owner of South Africa’s largest car-dealer network, said it’s planning as much as 4 billion rand ($450 million) in acquisitions to add to its logistics division.

“We have the capacity to take on more debt,” Chief Executive Officer Hubert Brody said in a phone interview today.

The net debt to equity ratio widened to 52 percent on Dec. 31 from 39 percent a year earlier, Johannesburg-based Imperial said today in a statement. The level, which remains less than the target range of 60 percent to 80 percent, provides “significant room for further expansion of the group,” the company said.

Imperial is looking for acquisitions in consumer goods and pharmaceuticals distribution in both Africa and Europe to boost its logistics network, Brody said. It bought a health care supply business from Johannesburg-based RTT Group (Pty) Ltd. in January, according to the company’s earnings statement.

The logistics division is suffering from slower demand that may impact fiscal 2013 earnings, Brody said. Its operating profit fell 1 percent during the six months through December because of a slowing German economy and a transport workers’ strike in South Africa.

Imperial’s stock fell 2 percent, the biggest decline since Dec. 4, by the end of Johannesburg trading at 5:00 p.m., giving it a market value of 42 billion rand. About 1.6 million shares traded, 1.6 times the three-month daily average.

Car Dealers

Imperial reported a 15 percent rise in first-half core earnings per share to 8.72 rand after growing profit at its car dealership and financial services divisions. Sales increased 18 percent in the period to 45.3 billion rand.

The vehicle sales and distribution arm is expected to benefit from a “very good spread” of brands that include Kia, Hyundai and Renault models, Brody said. “There is increased demand” for cheaper cars, he added.

Imperial expects total South African vehicle sales to rise about 9 percent this year, Brody said. That’s in line with a 9 percent rise reported by the National Association of Automobile Manufacturers of South Africa for the second half of 2012.

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