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Fresh wave of delistings to hit the JSE

Four offers this week alone, with a further nine offers/deals underway …
The number of R5bn-plus market cap companies on the bourse has increased over the past decade, suggesting the investment universe for larger investors has actually expanded over time. Image: Moneyweb

Long4Life has become the latest company to potentially disappear from the JSE.

The vehicle headed by Brian Joffe is the fourth listed entity on the JSE to announce a buyout offer this week alone.

Read: Brian Joffe will ‘relinquish’ Long4Life CEO post to become chairman

It announced yesterday morning alongside the release of its interim results that it had “received an unsolicited expression of interest to acquire all the shares” in the company. It said its board is evaluating the offer “and will update shareholders should there be any further developments”.

Shares in Long4Life jumped 16% on the news.

Read:

RMH

RMH (formerly RMB Holdings), which has a stated intention to monetise its remaining property portfolio – “in an orderly manner, to return the maximum value to RMH shareholders” – has received two approaches for separate parts of its portfolio.

Brightbridge Real Estate, based in Cyprus, has approached RMH with a R1.75 billion offer for all its assets excluding its Integer portfolio. Effectively, this comprises a 27.5% stake in Atterbury Property Holdings in SA, 37.5% of Atterbury Europe and 10.9% of Divercity Urban Property Fund. RMH says these assets had a net asset value of R2.9 billion as at March 31.

The second formal approach, from Fledge Capital, is for RMH’s 50% shareholding in Integer 3. This had a net asset value (NAV) of R168 million as at March, with Fledge’s offer being R60 million.

Alaris

Global radio frequency technology group Alaris Holdings (which listed as Poynting) announced on Monday it had received a firm intention notice from a consortium to buy out and delist the business. The R161 million offer is at R4.20 per share, a 22% premium to the 30-day volume weighted average traded price of Alaris shares.

CSG

Also on Monday, CSG Holdings said it had received a non-binding indicative offer from major shareholder ARC Fund (via UBI) to acquire the 75% of shares in the company it doesn’t already own and then delist the business. The proposed offer is set at 35c, with the company trading between 20c and 30c prior to the announcement.

Combined, these four companies have a market value of nearly R6 billion (with Long4Life and RMH together comprising R5 billion of that number).

There are three large caps (one of which also has preference shares listed) also currently in various stages of buyouts or potential offers.

Distell

The largest of these, Distell, with a market value of R41 billion, has been in discussions with global brewer Heineken since May. The brewer approached it “regarding the potential acquisition of the majority of Distell’s business”. At the end of September, it said “satisfactory progress has been made with regards to the discussions with certain issues still to be agreed”. It previously undertook to provide shareholders with more detailed information by the end of the third quarter.

Liberty

Shareholders of Liberty Holdings on Wednesday unanimously voted in favour of Standard Bank’s offer to acquire the remaining 46% in the insurance and property business which it did not already own. Liberty shares and Liberty preference shares will be delisted when the transaction closes in Q1 next year.

Imperial Logistics

In July, Dubai’s DP World announced that it had entered into an agreement to acquire Imperial Logistics for an estimated R12.7 billion in cash. The offer of R66 a share was at a 34% premium. In September, 86% of Imperial shareholders voted in favour of the offer.

If regulatory approvals are received as expected, Imperial will be delisted from the JSE in mid-February.

Last week, Nedbank announced it would buy back all its preference shares for R3.5 billion and delist these. Sasfin bought back all its preference shares in July of this year.

Aside from these larger transactions (and potential deals), a further four companies may be delisted in the coming months.

Adapt IT

The offer from Canada’s Volaris for Adapt IT is underway.

Stellar

Stellar Capital Partners will use its own cash to repurchase all its shares and delist the business. If approved by shareholders, the company will delist on November 30.

Bell

The Bell family is continuing with its efforts to buy out minorities and delist Bell Equipment.

Zeder

PSG’s Zeder Investments said in April that it “had received several approaches from third parties interested in acquiring a number of Zeder portfolio investments”. It said then it anticipated that “the evaluation of these approaches may take several months to finalise”. At the end of last month, it said “while substantial progress has been made in this regard” since the multiple cautionary announcements, “the impact of the Covid-19 pandemic has delayed certain aspects of the process”.

Analysing the trend …

In a report, Allan Gray’s Nadia van der Merwe and Stephan Bernard say “the downward trend in the number of company listings over the past decade is mostly a result of delistings among small businesses that fall outside the acceptable size and liquidity range of the average asset manager”.

“During 2020, there were 19 company delistings, 16 of which were smaller than mid-cap. In 2021 to date, there have been 11 company delistings, with 10 smaller than mid-cap.

“Although the number of delistings has exceeded that of new listings since 2016, the market capitalisation of new listings has exceeded that of delistings every year since as far back as 2008.”

They add that: “The number of companies with market capitalisations above R5 billion [in 2021 rand value] has increased over time – from 83 in 2000 to 113 in 2010, and 121 in 2021. This suggests that the investment universe for larger investors has actually expanded over time.

“Drilling down one further layer, it is interesting to note that many of the more prominent delistings of recent years have been for reasons that suggest value and confidence in future returns, rather than because of businesses failing.”

The pair note that: “Delistings include Clover, Pioneer Foods, Assore and Comair. All but Comair were takeovers or management buyouts, indicative of the attractive levels at which many of the shares on our market trade.

“News that Heineken is considering the acquisition of Distell and Standard Bank’s intent to buy out Liberty are further supporting examples.”

COMMENTS   30

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The delistings from the JSE, is not an indication of the weakness of the SA economy. It’s actually proof of its strength and long-term viability.

Foreign investors are buying SA companies, because South Africa is stable and the economy is growing.

Just because a company delists, it doesn’t mean it stops operating. They continue to be a part of the economy. Liberty is now a part of Standard Bank, Imperial is now a part of Dubai Ports World.

As the JSE becomes less important, it’s time for the government to step in and begin to promote “state capitalism”.

More government intervention, will allow our economy to continue to grow, but to the benefit of all South Africans.

@ EFF Comm : Great take ! Stalin would be proud of you .

Au contraire, my dear ssa agent. The entrepreneurs are taking the companies private to escape state attention and intervention. Soon they will take them offshore and show Big Chief Open Toe Sandal Uncooked Chicken the ultimate middle finger.

We already know exactly what “state capitalism” looks like. Think ESKOM, Transnet, SABC, Denel, the list is endless. The ANC’s idea of “capitalism” is one giant cargo cult – cadres being whisked from on meeting to the next, where heads are gravely nodded and comments invariably commence with “actually, in fact”.

“STATE CAPITALISM” IS A FIGMENT OF YOUR IMAGINATION.
THE MORE GOVERNMENTS INTERVENE THE QUICKER FAILURE ,NEPOTISM, CORRUPTION, INCREAED TAXES AND ULIMATELY BANCRUPCY SETS IN.
SA IS A THE CASE BOOK STUDY WITH SOE’S ESKOM,POST OFFICE,SAA,PROOF OF THE FAILURES.
YOU CLEARLY SUPORT CORRUPTION, THEFT, ANARCHY,AND ULTIMATELY COMMUNISM, YOUR DOCTRINE IS COMMUNIST AND PROVEN TO HAVE FAILED.
SOUTH AFRICA ,CUBA,NICARAGUA,COLUMBIA,ZIMBABWE,DRC, – THE LIST GOES ON…

Except the only country in that list, that is actually communist is Cuba.

Dangling the carrot to see who bites!

A lot of fish as always : why they bother to respond is beyond me ;

State Capitalism = Communism!

I’m not sure this EFF Commissar is an EFF supporter considering all the love he has for our government…I’m not sure what to make of this character.

EFF = ANC Youth League…

Bird from the same nest…

It’s clear Effie and Zuma went to the same school

Hey, but don’t fret, 7 of my best years was also spent in Gr6 much like yours

I also missed the grade where they gave counting classes and the negative effects of socialism

Buy a book and educate yourself

Once the 4% leaves our shores, the ANC will probably sell out to the Chinese, soon to be the new colonialists of Africa, taking over without firing a shot

And the red riding hood clan think the minorities are a threat..?

Take heed, the new masters are on the horison and they have no mercy or sympathy..If it’s socialism you want, they’re right up your alley

I truly question the educational standards of the people who constantly reply to this obvious troll! You are all playing into his hands on a daily basis. JUST STOP REPLYING!
The amount of negativity on almost every published article is truly astounding, and it appears to be from the same readers without fail. If you are so positive of the doom and gloom you regurgitate daily, please hop on the next plane. These frequent contributors actively log on daily just to splurge negativity! You know who you are…Stop! There are still many rays of hope left shining in this beautiful country of ours, your negativity is literally blinding.

EFF, you must have a very tiny mind to get your kicks out of life by trolling such drivel. So childish.

He is a paid troll. Elections are coming.

EFF…go back to school. You missed Economics 101.

EFF, welcome to the Moneyweb community. You and your organization might learn about the economy and management.

As far as your statement of state capitalism goes – 700 SOE’s are insolvent, (Eskom and SAA most notable), 9 out of 10 provinces have qualified audits and a few hundred municipalities are dis-functional.

The only reason the EFF wants state capitalism is to get their hands on the money.

More than ever SA pension investments are becoming vulnerable to concentration risk. If the SA investment climate is so healthy then there should not be a problem to change limits as follows:

– pre-retirement offshore allocation up to 50%
– post-retirement offshore allocation up to 75%

Why should there be any limits?
I believe freedom is spelled F.R.E.E.D.O.M.

When Moneyweb aggressively punts Bitcoin and cryptocurrencies in general in several articles and then blocks comments from those articles, alarm bells should start ringing.

How can this be a trustworthy news source when the riskiest ?asset/currency/security/gamble? currently is punted so aggressively and yet to comment is allowed?

Advertising or not, that is unethical.

Another one is B D T V (ch 4 1 2) , 90% of the time the business analysts are wrong.

The presenters are more correct in their analyses and have valid questions for example why should you not buy good solid South African mining company at a P/E of 3? when they are cash flush?

We have some of the best mining companies in world here in South Africa.

One analyst went against Anglo American last week Wednesday night, the share is up more than 10% now. And he wanted to short the S&P 500? look at it now?

I am going to start investing in the opposite direction of what they recommend.

Common senses people!

The Business analysts on the TV show DBTV are punting the hotel/leisure companies.

But these could be a mine field as they are loaded with debt up to their ears.

Welcome to corporate (mainstream) media. They tell the people to go the opposite way so they the corporates can make money.

As someone once recalled…

I once had a friend who grew up in China ask me why so many Americans watch the news. Confused, I asked, “What do you mean?”
She responded, “Well, in China no one watches the news because we all know it’s propaganda. I guess Americans haven’t figured that out yet”.
Among the moments that completely changed my paradigm on life – this was one of them.

The exact same goes for people in South Africa and all over the Western world.

As for RMH, after unbundling their shares in FNB it looks more like a small consulting firm plus a little bit of property.
A R1 or R2 share.

As for Liberty, they were going nowhere for a few years, more like a company that did not keep up with technology and the times.
A R60 share which used to be in the R130 range.

Once the share price starts to drop significantly and stays there for a long period then as a small guy you must start to worry as management might be doing some shady things behind especially when the company is not in serious financial trouble.
I see why some people completely avoid small companies.
Bought CSG when it was trading above R1 and now they want to give me 35 cents. This is not right. This is just an opportunity for the big shareholders to legally steal money from small guys like me. The big guys are not losing any money here as they are going to have some shareholding in the company that is making an offer.
What happens when a small guy like me refuses to accept this ridiculous offer? Any suggestion regarding this.

These are proxy moves for regulatory exits from Azania (the nationalisation of all listed stock is not outside of EWC) and yes, chucks of the business themselves will be here but the penetration of a more stable and prosperous Africa is most probably the intention. Zeder would be a good example?

The only reason to be listed is to raise large amounts of capital for own projects or acquisitions.

The hassle of being listed when a small number of parties own nearly all the shares is not worth it. Founders that list in any event don’t have liquidity as the market has a heart attack when a founder sell some shares. They have to borrow against their shares to avoid the disclosures. So listed shares help a bit with keeping the hired help overpaid.

The fun damagers don’t invest proper attention in small stocks.

Guys I have been around for many years in stock markets 🙂

I would be very concerned when the stock markets run for new high in Red October month.

Look at the JSE => 67,000

I have seen the Pump and Dump story many times before

End of comments.

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