Sime Darby unit buys Caterpillar dealership

PETALING JAYA: Sime Darby Bhd’s wholly-owned subsidiary Sime Darby Industrial Australia Pty Ltd (SDIMA) is acquiring the Cavpower Group, a distributor of Caterpillar equipment in South Australia and Broken Hill in New South Wales, Australia, for A$500mil (RM1.49bil).

In a filing with Bursa Malaysia, Sime Darby said SDIMA had signed a share sale agreement to acquire the entire share capital of Kuxton Pty Ltd and 98.9% share capital of Kagera Pty Ltd.

Kagera is the holding company of a group of companies that operate the South Australian Caterpillar dealership (Cavpower), several properties and interests in joint ventures.

Sime Darby said the acquisition will be financed through external borrowings and internal funds.

“The acquisition of Cavpower represents an opportunity for geographical expansion of the industrial division to enter the South Australian dealership market through an established, sizable and reputable provider with an entrenched platform for future growth.

“The acquisition complements the industrial division’s existing dealership footprint while diversifying from coal markets through exposure to large deposits of critical materials (copper, lithium and cobalt) in South Australia.”

With newly built state of the art facilities, Sime Darby said the additional capacity represents a significant opportunity for the group to utilise within its industrial division business in Australia.

“The acquisition offers Sime Darby greater profile and scale by acquiring a recognised global leading dealership and strengthens and consolidates Sime Darby’s position in Australia.

“Cavpower and Sime Darby participate in a number of common joint venture investments which will enable Sime Darby to capitalise on further.”

According to Sime Darby, Cavpower, achieved a profit after tax and minority interests of A$23.1mil (RM69mil) for the financial year ended June 30, 2022.

“Moving forward, Cavpower is expected to continue to grow its earnings driven by commodity tailwind exposure, current mining pipeline, South Australia mining region expectations as a global leader for critical mineral mining and utilisation of surplus capacity resulting in less capital expenditure required in the existing business.”

Separately, in a statement, Sime Darby group chief executive officer Datuk Jeffri Salim Davidson said the acquisition of Cavpower complements the group’s existing portfolio and provides geographic expansion to position its industrial division in high growth infrastructure and commodity areas of the Australian market.

“The transaction provides a rare opportunity for Sime Darby to gain exposure to the extensive resources sector in South Australia, further reinforcing Sime Darby industrial’s footprint in Australia and the Asia-Pacific region.

“We are very pleased to have retained Cavpower’s strong management team and look forward to working with them to build on its leadership in the resources, infrastructure and energy sectors.”

Cavpower employs more than 450 people through a network of nine branches across South Australia selling Caterpillar equipment, parts, service and technology solutions.