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Poynting targets global expansion with new deal

Nicola Mawson
By Nicola Mawson, Contributor.
Johannesburg, 20 Feb 2015
Poynting's $5 million buyout of ARA allows it to tap the US market.
Poynting's $5 million buyout of ARA allows it to tap the US market.

Centurion-based Poynting, which recently hived off its loss-making companies, is taking the risk out of its defence unit through the addition of US-based Antenna Research Associates (ARA).

The acquisition, which will cost $5 million (R58.3 million) and 75.8 million Poynting shares (worth R141 million), will enable Poynting to expand into the US market, which it sees as the "land of milk and honey", as ARA already has clients there.

Poynting last year agreed to sell its loss-making units to its now former CEO Andre Fourie in a deal that saw Poynting also pay over 14 million shares. The company now only comprises of its defence and digital television (through African Union Communications) units.

ARA, which supplies radio frequency and antenna systems, mostly to military system integrator and homeland security markets, will own 29% of Poynting once the deal is sorted, and will be its biggest shareholder. ARA CEO Logen Thiran will own 3% of the locally-listed company.

Poynting's shares closed 3c, or 1.64%, higher yesterday, to 189c. The company says its defence unit already has global clients, but its US sales are limited, while ARA operates in similar markets to Poynting in the US.

In addition to the growth opportunities, there are synergies between the companies, says Poynting in a statement. The deal, which requires approval, should be wrapped up on 1 July.

Poynting says "ARA has a clear growth plan" and the companies will work closely together to build a global business. ARA is on track to report more than $1 million (R11.7 million) in profit after tax for the current year.

However, ARA has been running at a loss, having reported a loss before tax of $933 000 (R10.9 million) for the year to April 2014. Poynting's defence unit turned over R17.5 million in the year to June, with a post-tax profit of R3 million, and its digital TV entity reported R13.7 million in profit.

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