Dream deals
Iinitially wanted my first column of 2018 to speculate on corporate manoeuvres that might transpire in the year ahead. However, the developments at Trencor earlier this month took precedence — so this effort is better late than never.
Events at Steinhoff have cast a pall over the JSE and perhaps tempered investors’ enthusiasm for adventurous corporate activity. But I think there could still be some intriguing deal making in the year ahead — especially on the small- to mid-cap company front.
Listed below are eight potential deals I’d like to see unfolding in 2018. But please be warned that these ideas are mere conjecture on my part, so add a pinch of salt.
Oceana Group
The fishing conglomerate has tried to uncouple itself from the vagaries of the fishing rights awards process by expanding offshore with Daybrook and building on bestselling brand Lucky Star. Next, it might cast its net(s) into aquaculture, both at home and abroad. I&J’S abalone-farming business may prove alluring.
Trematon Capital
The next big move by this small investment firm may well be to separately list its private-school venture, Generation Education. But I think it would be far more value enhancing for shareholders if Trematon were to spin out and list one of its specialist property funds.
Workforce*
This small services company has made several successful acquisitions over the years, though the larger and more diversified earnings base has done little to improve investor sentiment. To my mind, Workforce’s illiquid and unloved JSE countermate, Primeserv, could be an opportunity to target.
Wescoal
This small coal miner hasn’t done much wrong in recent years, but it still doesn’t enjoy strong support in the market. Per- haps a merger with another profitable junior coal miner — I’m thinking Hosken Consolidated Investments’ promising (and profitable) coal segment — might finally get sentiment smouldering for a sprawling empowered mining business.
Distell
Fresh from a deal to sell off its
French cognac business, this Remgrocontrolled liquor conglomerate looks determined to fortify its portfolio with bestselling brands that can secure viable niches in fast-growing markets. I suspect markets would cheer Distell taking a shot at Brait-owned wine, spirits and craft beer group DGB.
RCL Foods
Investors have lost their taste for this food brands conglomerate, as profit performances — dragged down by the poultry division — have lagged those of its main competitors. With poultry’s prospects all fluffed up, this might be an opportune time for RCL’S controlling shareholder, Remgro, to take advantage of iffy sentiment by making an offer to buy out minorities.
Cartrack
All eyes are on this vehicle-tracking and fleet-maintenance firm’s thrust into the US. But closer to home there may be a great deal to be done if Cartrack can latch onto rival Netstar, which is owned by Altron. Altron’s new activist shareholders, of course, may prefer to keep Netstar on its own course.
Grand Parade Investments (GPI)
This empowerment investment company appears close to finding profitable traction for its rollout of Burger King.
But would GPI have the appetite, at this juncture, to take a bite of Taste Holdings, which is rolling out global brands Starbucks and Domino’s? Doing so would admittedly put a lot on GPI’S plate. But it might also be a well-timed tilt at a struggling Taste — remembering that
GPI still holds valuable gaming assets and is struggling to meaningfully increase its stake in Spur Corp.
Would GPI have the appetite, at this juncture, to take a bite of Taste Holdings?