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Hudaco acquires Elvey

Industrial group Hudaco Industries recently acquired security equipment manufacturer Elvey Security Technologies (Elsec), in a deal worth about R46,9m.

Hudaco is a South African industrial group focused on the distribution of leading international brands of industrial and automotive consumable products. The Group's current distribution businesses serve the South African mining, agricultural, manufacturing and construction sectors which have been experiencing difficult operating conditions.

Elsec and its subsidiaries (the Elsec group) are leading distributors to the southern African security industry of electronic security systems and software including monitoring equipment, access control and intruder detection products with an annual turnover in excess of R100m. According to Hudaco, significant technological advances in recent years have increased the applications, reliability and ease of use of security and surveillance systems and this means that Elsec is well positioned to benefit from continued growth in the future.

According to the deal, the executive senior management of Elsec including Paul Wainstein and Jack Edery have entered into service contracts for a period of two and a half years. Commenting on the deal, Wainstein said that Elsec as a group was excited by the prospect of working with Hudaco. "The corporate culture of both organisations is remarkably similar," he said. "We have a young executive team, with similar interests, which augurs well for our combined efforts as we move forward."

Expanding on the reasons for the acquisition, Wainstein said that the timing had been ripe for both companies. "Hudaco had been looking to acquire a company which would bring much needed growth to its operations, whilst Elsec's ambitions for growth through acquisition will no longer be constrained by its own access to capital. In essence, Elsec's dynamic growth prospects and market leadership will afford Hudaco the growth opportunities it seeks, whilst Elsec will now have access to the group's reserves to roll out its acquisition and growth strategy."

Wainstein suggested that once the regulatory procedures had been bedded down, Elsec would make announcements on its intended strategic direction. Hudaco intends to apply to the JSE for the delisting of Elsec as soon as practically possible after the finalisation of the deal.

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