Case study

The acquisition of Safripol supports KAP’s strategic drivers

High barriers
to entry
Industry diversification
Adding value
Solid returns
on capital

The acquisition of Safripol established a diversified chemical division, incorporating the existing operations of Hosaf and Woodchem. Safripol’s inclusion in the group added another industry-leading industrial asset that is complementary to existing operations and, together with Hosaf, has established a unique polymer business cluster.

Together, Hosaf and Safripol have an estimated 37% market share in PP and 70% in HDPE and PET. There is only one other local PP supplier, with the rest of the market being supplied by imports. The business model, with global indexed and US dollar-priced products and raw materials, provides a pure US dollar margin business within South Africa.

An overlap in the customer base between Hosaf and Safripol further provides additional value to customers:

  • Synergies within the polymer cluster add to increased revenue, increased operational efficiencies and cost savings, due to wider product offerings, value creation and integrated management and support structures.
  • Distribution efficiencies will be created by combining deliveries and improving utilisation of transport through return loads on long-haul deliveries.
  • Sales and marketing structures will extract greater value from a consolidated client base.
  • Research and development teams from Hosaf and Safripol have been integrated and will ensure consistent applications of world-class and leading technical expertise to deliver premium products.

The combined and complementary products of Safripol and Hosaf created a polymer cluster that strategically positions the chemical division to provide three of the five polymers that underpin the plastics industry:

  • Polyethylene (PP) is a lightweight, high melting point plastic with high stiffness, hardness and strength. PP is used in the manufacture of injection-moulded articles, blow-moulded containers, pipe, sheet and textile fibres.
  • High-density polyethylene (HDPE) is polymerised from ethylene to produce a plastic with excellent stiffness and environmental stress crack resistance. It has superb chemical resistance and low water absorption and is ideally suited to the food industry.
  • Polyethylene terephthalate (PET) is used in the beverage and packaging industries, and primarily in the bottling industry because of its high intrinsic viscosity and clarity.

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