Barloworld’s share price ramped up over 15% yesterday after its CEO Dominic Sewela and the Saudi Arabian family-owned business, Zahid Group, firmed up an offer for all of the JSE-listed international heavy equipment distributor’s shares, at a whopping 87% premium to the share price.
The offer, which will lead to the delisting of Barloworld if it goes ahead, values Barloworld at R23 billion and represents a total value unlock at R123.10 per share, comprising a cash offer to shareholders of R120 per share, which will not be reduced by the R3.10 per share dividend already declared by Barloworld on November 22.
Barloworld’s share price surged 15.6% to R107.10 yesterday on the JSE, a price that was already 48% higher than a year ago.
The deal appeared to receive wide approval on social media, with, for instance, Urquhart Partners (@Urguhart) commenting on X: “And another one! The offer for Barloworld adds to what has been an exciting year for corporate activity including offers for MultiChoice, Capital & Regional, Anglo American (to be revisited?), Bell (close one, to be revisited??), MC Mining, Sasfin, Grindrod Shipping, Ascendis.”
GoldenEyeZA (@GoldenEyeZA) commented: “Great news for shareholders! This is a strong company that certainly seems undervalued, especially of late. But will this proposed offer come to fruition?”
Greg Davies (@the_gregdavies) wrote: “...This move aims to unlock significant value for shareholders and support Barloworld's growth strategy while maintaining its commitment to broad-based black economic empowerment. The transaction is subject to shareholder approval and regulatory conditions.”
Barloworld said in a statement yesterday that if the deal is successful, it would bring together “long-term committed investors for Barloworld and create a majority black-owned, privately held South African company.”
The plan was for Barloworld to retain its name and remain head-quartered in South Africa, and no job losses were foreseen. The proposed deal demonstrated investor confidence in South Africa, they said, and Barloworld’s Independent Board intended to recommend that shareholders vote in favour of the scheme.
Barloworld said the R2.9 billion Khula Sizwe broad-based vehicle would retain its shareholding and maintain its commercial arrangements with Barloworld, ensuring the 29 000 Khula Sizwe majority black beneficiaries—comprising current and former Barloworld employees as well as public shareholders—continued to benefit post the deal.
Addressing some earlier concerns among investors about the corporate governance aspects of Sewela being part of the takeover consortium, Barloworld said the Independent Board had implemented governance protocols to ensure safeguards were in place to address potential conflicts of interest and governance concerns around the CEO’s involvement in the transaction.
“A clear protocol was agreed between the CEO and the Independent Board which governs how he must conduct himself during this period, providing a clear delineation of the day-to-day operations of the Company and the proposed transaction,” they said.
Also, in line with the Companies Act and Takeover Regulations, the Independent Board appointed Rothschild & Co, as the Independent Expert to assess the offer and provide an opinion as it relates to the fairness and reasonableness of the terms and conditions of the proposed deal.
Zahid Group has been a primary CAT heavy equipment dealer since 1950 and brings extensive sector experience which it will leverage to support management to grow the business.
BUSINESS REPORT