Saab gobbles Grintek

By Leon Engelbrecht, ITWeb senior writer

Johannesburg, 25 Oct 2007

Saab, the Swedish defence and civil security company, has taken over local communications company Grintek.

Saab AB has acquired the outstanding share of Saab Grintek from the Kunene Finance Company (KFC), for R250 million, to become the entity`s sole owner.

"This transaction will allow for further cooperation between the defence-related operations in SA and the business units within Saab in other locations, says Kenth-Ake J"onsson, executive VP of Saab.

"Although we intend to integrate the defence business, Saab has initiated discussions with potential black economic empowerment (BEE) partners in order to accommodate the requirements from our customers and partners in SA," J"onsson adds.

The transaction will become effective once all legal matters have been finalised, says Saab SA CEO Per Erlandsson. He adds the negotiations and agreement were only concluded yesterday in Sweden.

KFC chairman Zoli Kunene says the company will seek other business opportunities. "We have been involved in developing the Grintek business for many years. It is our belief that the defence businesses will benefit from further integration with Saab. We will continue our cooperation with Saab for other business opportunities in SA," says Kunene.

KFC held a 29.64% stake in Saab Grintek. KFC, in turn, belongs to the Kunene Brothers Holdings (KBH) (50.1%) and a range of financial institutions. The holding company is owned in equal shares by five brothers: Zoli, Keith, Dudu, Zanosi and Menzi. The holding company has a 40% stake in Action Ford, the dealership network, and KFC has a stake in Glenrand MIB, Coca-Cola and McCarthy Kunene Motor Holdings.

A report in the Financial Mail, in April 2004, said the KBH shareholding in Grintek was then worth about R65 million.

Saab says it "will continue to work with KBH in other businesses like Grintek Ewation". In addition, Zoli Kunene and KBH CEO Graham Royston will stay on as non-executive Saab Grintek board members. The Kunenes will also remain Saab`s BEE partner at Grintek Ewation.

For the moment, Saab does not seem keen to replace the Kunenes. Regarding a new overall BEE partner, Saab says: "If equity ownership will be a prerequisite for Saab`s various business units to become successful in the local market, Saab will adhere to this."

Acquisition trail

Saab bought a 21% stake in Grintek for about R100 million at the turn of the current century. It has since steadily increased its stake in the former Grinaker company, which has also added to its portfolio in recent years.

In December 2005, Saab Grintek signed an agreement to acquire Aerospace Monitoring and Systems in a R30 million deal. The buy was cited as a "direct investment" by Sweden in SA. It was also punted as "another step in Saab`s strategy to actively engage and expand the South African defence industry on a global scale within its strategic niches, as well as continue its expansion into the South African and African markets".

In September 2006, it bought the communications division of Thales Advanced Engineering, for an undisclosed amount. The division had developed a radio frequency digital link, Link ZA, for the South African military. The data link is one of the few that exist outside the US-controlled North Atlantic Treaty Organisation.

Last month, Saab took control of Cybersim, a local scenario simulation and decision support software company active in the defence and civil security markets.