Barloworld Ltd is in talks to buy a business from Caterpillar Inc using proceeds from the sale of a unit earlier this year, the head of the South African equipment maker said on Monday.
Barloworld sold its underperforming Iberian equipment business in June to privately owned Italian group Tesa S.p.A. for 2.5 billion rand ($180 million).
“I have given myself a year to identify a business and I have already engaged Caterpillar. They have given me a commitment to a specific area,” Chief Executive Dominic Sewela told Reuters in a telephonic interview, without elaborating.
The rest of the proceeds would be brought back into South Africa and possibly used to buy back shares, he added.
Barloworld Equipment is the official dealer for Caterpillar’s CAT construction, mining and industrial machine range in eleven southern African countries, in addition to Spain, Portugal, Siberia and the Russian far east.
“Equipment is the bulk of our business so it makes sense that we continue to invest in that area. I am looking for heavy construction and mining-related type of geographies,” Sewela said.
The equipment division was the main contributor to an 18 percent jump in Barloworld’s full-year profit, helped by strong growth in mining.
Operating revenue for the company’s Russian equipment business soared 57 percent to $606 million in the year to the end of September, while revenues from the South African equipment unit rose 8.1 percent to 19.8 billion rand.
Diluted headline earnings per share (HEPS) from continuing operations came in at 1,150.9 cents, compared with 974.5 cents a year earlier.
The company issued a final dividend of 462 cents per share.
Barloworld shares were up 0.04 percent at 115.97 rand at 0956 GMT.
($1 = 13.9272 rand)
(By Patricia Aruo; Editing by Rashmi Aich and Mark Potter)