Consolidated Steel Industries (“CSI”) acquires 40% stake in Ergosystem Walling Solutions (“EWS”)

In February 2018, CSI announced that it has acquired a 40% stake in Ergosystem via the investment of significant money into EWS to strengthen their balance sheet. Managing Director of Ergosystem, Dean Armstrong, says the synergies between the companies, coupled with the extensive footprint of CSI, will have mutually beneficial results for both companies as well as their clients.

CSI acquires 40 percent stake in Ergosystem

Ergosystem and CSI, via one of its operating divisions, Stalcor, have been working together for many years, with CSI being the main supplier of aluminium for the company’s popular walling solutions. The recent acquisition fits seamlessly with Ergosystems’ plan to streamline efficiencies within their business and reach a broader African market.

“Over the past 24 months, there have been a number of changes within our business and joining forces with CSI is a giant leap forward in the right direction to help us achieve the growth that I have envisioned for the company. Key stakeholders within both businesses have identified a number of synergies that will help both of us better serve the African market,” says Armstrong.

Ergosystem manufactures a range of local partitions, dividers, privacy screens, feature walls and ceiling cladding products, among other solutions. The company’s products and fit out services are provided to the design industry and many of its expertise and solutions have been used in leading retail, hospitality and commercial products in Africa.

“Both Ergosystems and CSI work with the same construction materials, namely steel and aluminium, we serve the same industries, and we both have a presence in many of the same locations across the continent. Ergo Systems’ ability to now benefit from CSI’s distribution network and infrastructure will help us bring our solutions to more people,” adds Armstrong.

“We are very pleased to welcome Ergo Systems to CSI” says Paul Miot, the CEO of CSI. He further went on to say that he believed CSI could be of benefit to EWS in the following ways:

  • The investment into the business would significantly strengthen their balance sheet and allow EWS to achieve its growth potential; and
  • CSI would take over a lot of the administrative and accounting functions and thereby allow Dean and his team to focus on growing the business; and
  • The addition of 2 CSI directors to the EWS board would allow for more robust conversation at board meetings.

CSI is a market leading industrial conglomerate that comprises two principal business units, namely:

  • Global Roofing Solutions (“GRS”), one of the largest metal roofing and roofing accessory manufacturers in South Africa, servicing the construction and roofing industries in South Africa and Sub-Saharan Africa; and
  • Stalcor, one of the top three distributors of stainless steel and aluminium products in South Africa, servicing customers in the fabrication sector and steel merchants.

CSI’s combining of its project based businesses (GRS) and its trading businesses (Stalcor) has promoted synergies and created balanced revenue and cash flow streams for the group.

The CSI businesses are pedigreed, having:

  • highly established brands in the construction and steel fabrication industries;
  • trading histories spanning over 50 years;
  • a profitable and highly sought after African footprint;
  • innovative and skilled management teams;
  • a stable work force of approximately 1,000 people;
  • a high growth history over the past 4 years – which bears testament to effective counter cyclical economic strategies; and
  • expected double digit growth over the next 3 years, despite a slow growth economy.

CSI’s African operations are all profitable, driven by strong local management teams who have partnered with relevant developers, construction companies and contractors. The African footprint would be difficult and costly to replicate, and creates a competitive advantage for the Company. CSI is and will be realising continued high growth coming from its African operations.

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