New-look fish to fry?
Consumer brands conglomerate AVI recently reeled in its cautionary notice around weighing up expressions of interest for certain of the group’s businesses. Most market watchers said this referred to AVI’S fishing operations: I&J, Australian seafood joint venture Simplot and a big abalone farming venture at Danger Point.
One could imagine that fishing conglomerate Oceana Group, which now has an appetite for aquaculture ventures, as well as acquisitive blackcontrolled counters such as Premier Fishing & Brands and Sea Harvest all closely eyed AVI’S fishing assets.
Perhaps AVI has the intention of formulating its own empowerment deal and retaining a minority stake in a newlook fishing company, to be separately listed on the JSE?
Meanwhile, the quiet consolidation of the fishing sector continues in the runup to the awarding of new fishing rights in 2020.
The recently released annual report of unlisted abalone farming group Abagold disclosed the sale of a 30% stake in its Specialised Aquatic Feeds (SAF) business to Viking Fishing Group for around R10m. Viking, of course, was dealt a heavy blow when it lost a huge chunk of its hake fishing allocation earlier this year.
Viking’s aquaculture operations certainly have scale. They span abalone, oysters (in Namibia), live mussels and fresh and frozen rainbow trout. The SAF investment looks interesting, considering that in 2016 Abagold invested R26m in a highly specialised feed production facility. The annual report showed that SAF posted an aftertax loss of R4.3m in its second full year of production.
But having Viking as an equity partner and customer should help shift the business towards profitability. I reckon it’s only a matter of time before one or two aquaculture operations, which are not subject to the vagaries of catch allocations (yet), wend their way onto the JSE — perhaps even making a splash as early as next year.
An honourable exit?
With the “low-ball” buyout offer to minority shareholders in mining services group Buildmax reeking of opportunism, it was fairly heartening to see BSI Steel offering a decent premium price and a “stay-in” clause to help facilitate a comfortable shuffle off the JSE. For the record, BSI has proposed buying out minorities at 50c/share — a price that represents a 67% premium to the 30c/share 30-day volume-weighted average price on the JSE.
Bsi’s recent trading update suggests the road to full recovery will be long and arduous, and already 76% of shareholders have indicated irrevocable support for the proposed delisting scheme. But BSI has graciously offered shareholders an option of remaining on board an unlisted company — and a whopping 77.3% of them are keen to ride along.
There will, no doubt, be less brittle trading times for BSI in ensuing years. I also have a sneaking suspicion this little counter might take the opportunity, at a later stage, to re-list on one of the newer stock exchange platforms that are now up and running in SA.
. . . And that’s not all, folks
I’m ambivalent towards share buybacks, having seen smart efforts by companies like Mazor contrasting with ill-timed and expensive exercises by the likes of Anglo American.
Direct retailer Verimark’s repurchase of almost 3.4m (or around 3%) of its already illiquid shares at 80c/share does not strike me as particularly inspiring. Verimark had most of 2016 to patiently snap up shares in the 35c to 40c range, so why it decided to enter the open market in late November at markedly higher prices is baffling.
In fact, the share has held up remarkably well after an iffy interim showing to end August.
Hopefully the enthusiasm for the share buy-back means Verimark, which prefers a stronger rand for its largely imported product range, might have underplayed its ability to deliver an improved second-half performance.
The quiet consolidation of the sector continues in the run-up to the awarding of new fishing rights in 2020