Dawn globalises manufacturing operation

By Mark Allix

GROHE‚ said to be Europe’s largest single-brand manufacturer and supplier of sanitary fittings‚ will buy 51% of JSE-listed building materials and fixtures group Distribution and Warehousing Network’s (Dawn’s) Watertech Companies subsidiary for R880m in cash.

The group said on Wednesday that the effective date of the transaction would be no later than November 30‚ or an extended date no later than April 30 2015.

Dawn said the transaction would be structured within a newly created joint venture company‚ Grohe Dawn Watertech Holdings‚ 51% owned by Grohe and 49% by Dawn.

The proceeds of the transaction would be used by Dawn to repay debt and buy businesses that fitted within its core competencies‚ the group said.

The acquisition would involve all of Dawn’s Watertech Companies‚ consisting of Cobra Watertech‚ Apex Valves South Africa‚ Expiro Manufacturing‚ Vaal Sanitaryware‚ Isca and Libra Bathrooms.

“We are extremely excited about this major step in the group’s strategy‚” Dawn CEO Derek Tod said on Wednesday. “We have for a number of years sought to globalise our manufacturing operations.

But he said that to be a globally competitive product manufacturer it was necessary to have “full access” to global technology‚ global manufacturing expertise and global distribution networks.

“As southern Africa cannot always provide the volumes to factories ... to warrant the investment in technologically advanced high-volume equipment ... Dawn decided to bring globalisation to its southern African factories through ... global manufacturing partner ... Grohe.”

The management teams in the operating companies would remain unchanged. The executive committee of the new joint venture company would be led by Mr Tod and Julian Henco‚ previously vice-president of emerging markets at Grohe.

“For us‚ acquiring Dawn’s Watertech businesses is another major step. As part of our sustainable growth strategy‚ we are excited to be expanding our activities in Africa’s southern region‚” Grohe Group’s CEO and chairman‚ David Haines‚ said on Wednesday.

Dawn would benefit from Grohe’s expertise in research and development‚ design and exclusive distribution agreements that allowed Watertech Companies to distribute Grohe’s products in agreed African territories.

Grohe would distribute Watertech Companies products in all global territories other than the agreed African territories.

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