NIH, Nosa sale lifts shares

MICROmega Holdings share price climbed to a three-month high on the JSE, lifting its stock by 15.66 percent after the news that it was selling its two subsidiaries Nosa Investment Holdings (NIH) and Nosa Proprietary (Nosa).

MICROmega has entered into sale of shares and sale of intellectual property agreements with First Carlyle Growth V (Carlyle) for a maximum consideration of R747.8 million.

The share price gained R1.55 to R11.45 a share on Friday afternoon on the news, but later closed 13.13 percent up at R11.20 at the end of the day.

MICROmega acquired the Nosa Group in 2005 and it has seen the business grow substantially from being a loss-making operation at acquisition to generating after tax profits of R68.8m for the financial year to end March.

The value of the net assets of the NOSA Group at the end of March was R344.1m.

Explaining the rationale behind the selling of Nosa, the group said in order to maintain the historical growth levels, it had become a business imperative to focus on new products, services and markets, both locally and internationally.

“At a strategic level, the capital investment required to service growth in these areas does not form part of the MICROmega long-term capital allocation plan,” MICROmega said.

The group has deemed it fit to let a large, well-capitalised organisation like Carlyle that is ideally positioned to make such investment and thereby ensure that the Nosa Group is able to expand its operations and resume the historical growth levels.

The shareholders of MICROmega were set to benefit from this disposal as the company said the net proceeds of the disposal would be mainly utilised to pay a cash dividend to shareholders.