Don’t let this one go

Ihave hinted previously that Interwaste might be subject to a takeover after the market declined to recognise its steadily improving operational performance. I also believed the main shareholders — the Willcocks family and Corocapital — would most likely make an offer to minority shareholders and delist the company from the JSE.

So it was with some surprise that I learnt of a buyout offer from Francebased international waste management player Séché Environnement. The 120ca-share offer represents a generous premium of nearly 48% to the 30-day volume weighted average price of Interwaste’s shares as at September 28, the day preceding the issue of a cautionary announcement relating to the Séché offer. The Willcocks family (with a 31.7% stake) and Corocapital (which has 15.3%) have already given the offer the thumbs up. Still, minority shareholders might ponder the rationale behind the proposed transaction.

Officially, Interwaste believes Séché, which operates in 15 countries, will be able to bring its products and services to a broader customer base — particularly high value-added targets in the local industrial, energy and mining sectors. Interwaste notes that the deal forms part of “an ambitious international growth strategy focusing on key selected markets with the most promising outlook”.

In short, Interwaste’s local skills, combined with the products, services and technical expertise brought by the French group, should “deliver enhanced returns to shareholders of Séché”.

This all sounds rather compelling, and makes me wonder if Interwaste contemplated another way of executing the transaction. Minority shareholders might prefer to go along for the ride in a more diversified environmental management vehicle, which could easily secure a secondary listing on the JSE.

I really hate to see a good small cap shuffling off. Perhaps minorities might ponder longer-term value propositions before they take the money and run?

Unexplained move at Choppies

I know a few bitterly disappointed investors who enthusiastically backed Botswana-based retailer Choppies as a serious rival to Shoprite in Africa. Clearly matters have gone horribly awry at Choppies, with the company unable to indicate when it will be able to publish overdue results to end-june. The Botswana Stock Exchange has lost patience, and suspended the share last week. The JSE followed suit.

Something appears to have taken place after PWC was appointed auditor earlier this year. The unaudited interims were also delayed when the Choppies board asked management for more detailed verification and valuation of inventory in conjunction with PWC. The official reason for the delay remains unspecific, and unhelpful.

In the meantime, retailer Syd Muller — former chair of Woolworths and now a nonexecutive at Long4life — resigned as an independent nonexecutive.

Afrimat in the balance

I’m no longer sure how to describe the ever morphing Afrimat other than as a perennially profitable counter.

CEO Andries van Heerden, one of the smartest dealmakers around, has created a reassuring operational balance. Interims to end-august show the traditional construction materials segment generating about 57% of revenue, with bulk commodities chipping in a meaningful 24% and industrial minerals 19%.

This is markedly different from the financial year-end, when bulk commodities represented only 10% of top line. The construction materials segment accounts for 56% of profit, bulk commodities 25% and industrial minerals about 20%. The development of the bulk commodities segment will be interesting to gauge.

We should already see the benefits of operational tweaks in the second half, and I don’t think it’s far-fetched to speculate that this segment (perhaps enhanced by further acquisitions) could become Afrimat’s biggest revenue and profit generator in just a few years.

Minority shareholders might prefer to go along for the ride in a more diversified environmental management vehicle