Daily Maverick
Dailymaverick logo

Business Maverick

Business Maverick, South Africa, DM168

The Finance Ghost: Will Bidvest have more luck in Australia than most SA corporates?

The Finance Ghost: Will Bidvest have more luck in Australia than most SA corporates?
The Finance Ghost
By The Finance Ghost
10 Jul 2022
Facebook
0
Australia is terrorised by deadly spiders, poisonous snakes — and failed international acquisitions by South African corporates. There is a long list of local groups who have seen shareholder value head Down Under as a result of these deals, with Woolworths as the most frequently used example. But will Bidvest’s deal fare better?

The good news for Bidvest shareholders is that the company knows exactly how to do deals, as that is how Bidvest has been built over the years. The latest deal is to acquire 100% of BIC Australia, an integrated facilities management business that services mainly A-grade offices in New South Wales. 

The enterprise value of the business is R1.8-billion, so Bidvest (market cap more than R70-billion) isn’t exactly betting the farm.

Some relief for tough balance sheets


There are several companies on the JSE that are executing turnaround stories. Some of these are self-inflicted and others are the depressing outcome of lockdowns.

City Lodge Hotels is celebrating a strong return of activity in the hospitality industry. To give more breathing room to its recovery, the company sold its East African operations and the deal has finally closed, which means a healthy amount of cash will be checking into the City Lodge bank account.

Nampak has bigger challenges that were already there before the pandemic. The share price is down more than 30% this year as market jitters took the shine off risky turnaround plays.

There’s been a 20% jump in the past few days though, based on the news that Nampak has been granted an extension by its funders for the reduction of net interest-bearing debt by R1-billion. Nampak now has until April 2023 to come up with the money, which kicks the can further down the road.

There’s also good news for Aveng shareholders, with the company winning a legal claim for R282-million against a customer. This dispute in the McConnell Dowell business has been going on since 2016, a useful reminder that even major construction projects take less time than legal battles. 

Aveng now needs the Trident Steel disposal to go ahead so that it can settle the remaining debt in South Africa.

DSTV: fetch the croissants


French media company Groupe Canal+ has increased its stake in MultiChoice to more than 20%. Canal+ is owned by Vivendi, a French media giant with a market cap three-and-a-half times larger than MultiChoice. Speculation of a bigger transaction is rife.

Billionaires swoop on Mediclinic


Although we can only guess what the background to this potential deal was, it probably involved an expensive drink or two in Geneva. Johann Rupert’s Remgro is teaming up with Mediterranean Shipping Company (MSC) for a potential acquisition of the remaining shares in Mediclinic.

If you’re wondering why a shipping company wants to own a hospital group, you aren’t alone. MSC is a private company, so the incredibly wealthy Swiss family that owns the group can technically do whatever it wants. The image of a late-night drink in Geneva hopefully makes more sense to you now, or at least more sense than the thought of floating hospitals.

A price was put forward to the Mediclinic board at the beginning of June and rejected. Since then, the potential suitors have sent another four proposals, the most recent of which has piqued the independent board’s interest.

There is no firm intention offer at this stage, as we were sharply reminded by the release on SENS of a “put up or shut up” announcement. UK takeover law (Mediclinic is domiciled in the UK) is nothing if not colourful, much like their politicians.

Mining profits are volatile


Tin miner Alphamin reminded us that mining profits are anything but predictable. Despite achieving record quarterly production in the second quarter of the 2022 financial year, EBITDA (a proxy for operating profit) fell by 32% compared with the preceding quarter. A drop in sales volumes of 3% didn’t help, but that wasn’t the primary driver of this result.

With global commodity prices in disarray and displaying exceptional volatility in recent months, the tin price achieved by Alphamin dropped by 19% quarter-on-quarter. That was the primary driver.

Despite the drop in profitability, the important point is that Alphamin is still doing very well. Net cash increased by 6% over the quarter and an interim dividend has been declared.

Alphamin bulls are excited about the Mpama South exploration, which is expected to take Alphamin’s share of the world’s mined tin from 4% to 6.6%.

The mining sector is a rollercoaster and is only for those with a strong stomach. DM168

After years in investment banking by The Finance Ghost, his mother’s dire predictions came true: he became a ghost.

This story first appeared in our weekly DM168 newspaper, which is available countrywide for R25.

recession south africa load shedding

Categories:

Tags: