Saudi Group Offers $1.3 Billion to Acquire South Africa’s Barloworld

Saudi Arabia’s Zahid Group and its partners, Gulf Falcon Holding and Entsha, have proposed a $1.3 billion buyout of South Africa’s Barloworld.

The deal values the construction equipment firm at 22.8 billion rand (120 rand per share), a 30% premium over its last closing price. Barloworld is a key Caterpillar Inc. distributor in Africa.

The offer comes amid growing optimism about Africa’s construction industry, projected to grow 27% by 2029, fueled by infrastructure investments and expanding consumer markets.

South Africa alone requires 4.8 trillion rand in infrastructure spending to boost economic growth, according to President Cyril Ramaphosa.

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If approved, the transaction will include the 3.10 rand dividend declared by Barloworld last month. Shares surged 22% to 113 rand after the announcement, reflecting investor confidence. Zahid Group, which owns 19% of Barloworld, began acquiring shares four years ago as the company struggled with a post-pandemic slowdown.

Key Takeaways

The proposed Barloworld acquisition underscores a broader Middle Eastern investment trend in Africa, aimed at leveraging growth opportunities and expanding influence.

Zahid Group’s move follows a series of high-profile projects, including ACWA Power’s $10 billion renewable energy investment in South Africa and DP World’s management of nine African ports.

Barloworld’s strategic importance as a Caterpillar dealer across multiple African nations, alongside its diversification efforts, including operations in Russia, makes it a key target. As competition from players like China and France intensifies, Middle Eastern firms are positioning themselves as critical infrastructure and industrial investors in Africa.

If successful, this deal will add momentum to the region’s infrastructure development while providing a foothold for Zahid Group in Africa’s growing construction market.