Berger Nigeria (JBN) is set to acquire 90 percent stake of affiliate Julius Berger International (JBI), in line with German construction giant Bilfinger Berger’s exit strategy, by the end of 2012.
Although JBN itself is 39.9 percent owned by Bilfinger Berger, the deal to consolidate JBI within the company is part of Bilfinger’s wider strategy of edging out of Nigeria by ultimately selling its stake in JBN.
The strategy will see 60 percent of JBI, which consists of the engineering and services activities of Bilfinger Berger Nigeria, acquired by JBN, with a further 30 percent bought by the end of the year.
“This strategy began in February, when Bilfinger Berger sold 10 percent of its stake in JBN to local engineering and construction company Nestoil for $26 million,” Akintola Akinbamidele, analyst at Renaissance Capital, said in an email.
Nestoil Group, a Nigerian engineering and construction company for the oil and gas industry, acquired a 10 percent share of Julius Berger Nigeria Plc (JBN), from Bilfinger Berger, leading to the increase of JB’s Nigerian shareholding to 60.1 percent.
According to Bilfinger Berger, plans are underway to gradually reduce its ownership of JBN and limit its involvement in Africa’s second largest economy exclusively to financial investments.
The company justified its strategy citing recent initiatives – Nigerian Content Act – on the part of the Nigerian government, “aimed at an increase of local content in the national economy”.
JBN has been trying to diversify its business. In 2006, it founded Julius Berger Services Nigeria (JBSN), a multiservice terminal operator at the Warri Old Port, in the Niger-Delta region of Nigeria, with a comprehensive equipment pool and vast terminal size ensures timely and efficient loading, offloading and storage.
In 2011, it established PrimeTech Design & Engineering Nigeria Limited for the provision of design and engineering support services to the company, and incorporated another subsidiary, Julius Berger Medical Services Limited (JBMSL).
JBMSL is to carry on business as a health care provider for the operation of medical service centers, hospitals and all forms of medical and health care services.
Julius Berger Nigeria PLC, is Nigeria’s largest construction company in terms of market capitalization. In March, it reported that profit for the year through December 2011 increased to N4.87 billion ($31 million), while its revenue fell from N173.7 billion ($1 billion) to N169.41 billion ($1 billion) a year earlier.
