Overview
In May 2025, Hudaco Industries Limited (JSE:HDC) completed the acquisition of Isotec Group for a maximum consideration of R709 million, which is Hudaco’s largest acquisition so far.
Merchantec Capital acted as the exclusive sell-side advisor to Isotec, guiding the shareholder to achieve a successful transaction. This landmark transaction not only delivered a premium outcome significantly above the pricing expectation for Isotec’s shareholder but also revealed several key lessons for business owners looking to confidently sell their business.
Transaction Overview
Having grown the group since inception and now nearing retirement, the founder, Managing Director, and sole shareholder wanting to divest his shareholding from the group approached Merchantec Capital to help him realise the best deal for his business which included value, structure and succession for his employees.
Going through Merchantec Capitals proprietary sell-side process, the shareholder selected Hudaco Industries Limited as his preferred bidder. A diversified industrial group listed on the JSE, Hudaco acquired the trading assets and liabilities of Isotec Group, to complement its existing operations and to broaden Hudaco’s product offering.
As the Isotec Group manufactures and distributes thermal and electrical insulation materials used in transformers and electrical motors, serving industries like mining, manufacturing, railways, and power generation. These capabilities complement Hudaco’s existing businesses such as Powermite and Varispeed, enabling Hudaco to offer a more integrated solution to the electrical power transmission sector.
The transaction also significantly improved Isotec’s Broad-Based Black Economic Empowerment (B-BBEE) rating, which is strategically important for operating in South Africa’s industrial sector.​
Key Insights and Takeaways
Price Maker Through Competitive Bidding Process
Merchantec Capital’s deep database and extensive networks enabled the shareholder to engage with an extensive buyers’ universe of local and international acquirers. This culminated in the receipt of multiple compelling offers from both financial and strategic investors, allowing the shareholder to act as a price maker rather than a price taker which is key to achieving a market premium on his business and the desired valuation.
Value Creation Through Advisory Excellence
Merchantec Capital’s hands-on approach was instrumental in achieving a successful transaction. From preparing Isotec for market to managing negotiations and assisting with due diligence requests, Merchantec Capital ensured Isotec was positioned to attract the right acquirer aligned with the shareholder’s vision for the future.
Leveraging Key Partnerships with Industry Leaders
In conjunction with key partners Andersen SA and Anchor Capital, Merchantec Capital was able to ensure the shareholder received comprehensive legal, tax and wealth management services, ensuring maximum value creation through a pre and post transactions service offering.
Merchantec's Role
Preparation & Positioning
Worked closely with Isotec’s shareholders to prepare the business for market.
Investor Engagement
Identified and engaged qualified buyers, managed NDAs, and facilitated transparent communications.
Deal Structuring & Negotiation
Led negotiations, managed due diligence, and coordinated legal and compliance requirements.
Execution & Closing
Oversaw the final phase, driving the transaction to timely completion and seamless execution.
