Long4Life shares fall after reaffirming plan to buy Holdsport

SHARES in Long4Life declined 22.31 percent yesterday to close at R6.06 after the listed investment holding company reaffirmed its intention to acquire 100 percent of Holdsport, the listed retailer of sport, leisure and recreational merchandise.

Holdsport has a national network of 63 stores that includes Sportsmans Warehouse and Outdoor Warehouse.

The group reported a 5.8percent increase in sales to R1.8 billion for the year to the end of February.

News of the proposed transaction first broke about three weeks ago.

Long4Life said yesterday that the offer would be implemented through a scheme of arrangement.

It said shareholders in Holdsport would have a choice of to receiving 12.10 ordinary shares in Long4Life for each Holdsport share or 11.20 Long4Life shares and R5 in cash for each Holdsport share, subject to a maximum total cash consideration of R204 million.

The group said the total cash to be paid would not exceed R204m and would be funded by Long4Life from its existing cash resources.

Long4Life chief executive Brian Joffe said: “This is a pivotal acquisition for Long4Life and aligns with our stated investment criteria. Holdsport not only adds significantly to the intrinsic value of Long4Life, as well as our overall gearing capacity, but will prove to be key in establishing and building the Long4Life investment platform in the lifestyle sector.”

Long4Life said the offer would enable shareholders in Holdsport to realise value for their current shareholding.

It also provided Holdsport shareholders with the opportunity to participate in a growth opportunity.

“This acquisition provides Long4Life with an entry into the exciting sport and outdoor markets, which we believe have tremendous future growth potential,” Joffe said.

If the deal goes ahead, Holdsport’s JSE listing will be terminated and it will become a wholly owned subsidiary of Long4Life.

The acquisition is subject to a number of approvals, including regulatory approval by the JSE, the Takeover Regulation Panel and the competition authorities, as well as approval by Holdsport and Long4Life shareholders.

Long4Life said the transaction was expected to be completed in the third quarter of this year.

Joffe added the transaction would provide Holdsport with access to Long4Life’s strong balance sheet, providing appetite and capacity to grow both acquisitively and organically while also providing the company with access to its management team’s proven deal making expertise.

Long4Life, which listed on the JSE in April, is also in discussions to acquire beauty franchisor Sorbet for about R130m.

Holdsport shares yesterday gained 1.75 percent to close at R66.70 yesterday.