Johannesburg - The planned acquisition of CIC Holdings [JSE:CCI] by Imperial Holdings [JSE:IPL] for R724m has received the thumbs-up from analysts, despite the premium Imperial will pay to acquire the entire listed share capital of the Namibian-based logistics group. Imperial's share price ended Tuesday 0.72% higher at 9 060c, compared to a 1.25% gain on the JSE's Industrial 25 index. Meanwhile, CIC Holdings' share price ended the day at 275c/share - a 10% leap on its previous close. CIC Holdings is a Namibian company, which operates the distribution, warehousing and merchandising of fast moving consumer goods (FMCG). The company operates in Botswana, Swaziland, Mozambique and South Africa. "This is a good little business that is highly regarded and well run," said Paul Theron from brokerage Vestact.

Imperial has submitted a firm intention to buy 100% of CIC at a price of 287c/share. The price has a premium of 32.5% to the 30-day volume weighted average share price of 217c on June 8. Theron said that although the premium on CIC's shareprice is "modest", it should be taken in context of the fact that the company's shareprice does not trade within a big margin. "The price does look a bit steep but it's important not to get hung up on it, it all depends on what they do with the business," said Dirk Kotze, portfolio manager from Coronation Fund Managers. "Usually Imperial expands an acquired business quite substantially. At R700m this isn't a huge investment for Imperial so one should see the price paid more in the context of what this business will eventually become."

Imperial plans for CIC to merge with its consumer logistics division - which is the biggest part of the group's key logistics business. "This acquisition will support our strategy of servicing our blue chip FMCG customer base into Southern Africa," said Marius Swanepoel, CEO of Imperial Logistics. Imperial's decision to bulk up logistics is directly in line with the transport company's acquisiton intentions which were announced earlier this year. At the time, Imperial CEO Hubert Brody announced that the company's slimming down phase - during which it disposed of non-core units such as Imperial Bank - was over. Brody added that Imperial would be willing to spend as much as R4bn - or 20% of its market share - on acquisitions. "The company has good cash flow generation, is asset light and has an ability to maintain a consistently high return on invested capital which are all key criteria for Imperial," said Brody. Following the completion of the buy-out, CIC will delist from the JSE.