On Friday, Altron, which already owns a 61% stake in Altech, made an offer to pay R47.50 in cash for every Altech Share, valuing the company at R5.04 billion, according to data compiled by Bloomberg.
Shares in Altech jumped 29.69%, or R10.21, to R44.60 on the JSE by close of play on Friday, giving the company a market cap of R4.74 billion.
Analysts were somewhat underwhelmed by the news, with some noting that Altron shareholders were unlikely to be impressed by the premium price offered for Altech’s shares.
Wayne McCurrie of Momentum Wealth said in an interview with Moneyweb: “Remember, the share has come from R80 (November 2009), and these have been quite poor performing shares, both Altech and Altron…”
“The companies have not done well, neither of them. The share price has not done well. They had a disastrous foray into East Africa, and they had to write that off by a major amount, and then sell off what was left there. So the companies have not done well over the while.”
“Obviously the Altech minorities are very happy with this payment – and it’s cash. It’s not Altron shares. I don’t think they will turn down this offer. But we don’t own any of the shares,” McCurrie said.
Altech shareholders would receive 2.22 Altron shares for each Altech share they own instead of cash, Altron said in a SENS release on Friday.
Altech has since, largely offloaded its failing businesses in East and West Africa.
By way of explanation for the move in an interview with Moneyweb, Altron’s Venter said: “I think strategically there are a number of rationales for this transaction. The primary of that is to extract synergies that we believe exist between our Bytes operation and our Altech operation, both of which operate in the converging IT space, and this allows us to extract those synergies in a much more meaningful way and also presents us with an opportunity of offering our customers a more cohesive approach to their IT solutions and products that they require.”
In 2007, Altron unsuccessfully made a similar offer to take full control of Altech.
“We’ve had a long-stated goal as Altron to ultimately have one listed entry point into the group. Apart from the synergistic benefits that I talked about earlier, it’s more investor-friendly, it’s an easier group to understand, it’s a simplified structure and it is cumbersome to have a listed company owning another listed company – 61% of that company.”
“So we believe this takes away that cumbersomeness, and gives us some good opportunities,” Venter said.
“So this is not something that just came about. It’s been a stated goal for some time and, if you recall, going back in our history, some of our prize subsidiaries were also listed that are now 100% owned, and we went through a similar process. Powertech and Bytes were both listed entities of our group in years gone by.”
Following implementation of the scheme, application will be made to the JSE to terminate
the listing of Altech Shares on the JSE.