Saudi company Amiantit has decided to sell 70% of its operations in subsidiary Amitech in Brazil, Argentina and Mexico to Colombian group Inversiones Mundial. The deal was closed this week by Amitech Brazil, which produces large diameter pipes and connections. The Saudi company is going to keep a 30% share.
In the first half of this year, Amiantit announced it was negotiating the sale of part of its assets in some countries. According to the organization, the value of the deal with Inversiones Mundial is 33.75 million Saudi riyals, or US$ 9 million.
Apart from that, the Arab company is going to receive 11 million riyals (US$ 2.9 million) relative to loans made in previous years. The Saudi group took control of the Brazilian company, which was then called G-Tec, in 2002.
The president of Amitech Brazil, Roberto Roselli, said that Amiantit has decided to prioritize the markets in Europe, Africa, Middle East and Asia. Amiantit was established in Saudi Arabia in 1968 and recently underwent a fast period of international growth, through acquisitions of foreign companies, now owning 34 factories, own or in joint ventures, in 18 countries.
At the same time, Inversiones Mundial intends to increase its presence in Latin America. The company currently operates in the areas of paints, chemical products, pipes, retail and packages and has units in Colombia, Venezuela, Ecuador, Mexico and Chile.
The organization owns technology Flowtite, for production of polyester pipes strengthened with fiberglass, the same used by Amiantit and Amitech, and will now also have subsidiaries in Brazil and Argentina. The company seeks leadership in the reinforced pipe market in the region.
According to Roselli, Inversiones Mundial has imposed as a condition for completion of the business the control of Amitech in Brazil, Argentina and Mexico. The continuation of Amiantit as a partner in the company, however, guarantees the continuation of technology transfer. The Saudi group owns six technological development companies.
Roselli guaranteed that the transaction is not going to interfere in the Amitech investment plans in Brazil, neither in the agreements signed with other clients. New equipment is being installed in the factory in the interior of the state of São Paulo, expanding the production capacity from the current 120 kilometers of pipe per year to 300 kilometers in early 2008.
The company recently signed a contract with the government of Ceará (NE Brazil) to supply 19 kilometers of pipes for the Integration Canal, the largest water distribution system ever built in the state.
Roselli stated that the Amiantit sale was not motivated by the performance of the business. "The business has been performing well, with good perspectives for the future," he said. According to the executive, Amitech Brazil sales grew 50% from 2004 to 2005 and 80% from 2005 to 2006. He adds that revenues are currently around US$ 15 million.
According to information supplied by Amitech, the factories in Brazil, Argentina and Mexico had joint revenues of US$ 41 million last year and employed 250 people, being 85 in Brazil.
Inversiones Mundial, established in 1921, in turn, has annual revenues of US$ 700 million. Amiantit had revenues of US$ 709 million last year.
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