Finweek English Edition - - Companies & markets - MARC HASENFUSS

PAL­ADIN CAP­I­TAL, the private eq­uity spe­cial­ist con­trolled by PSG, is look­ing to buy out Namib­ian ser­vices group CIC Hold­ings. At the launch of Pal­adin in Stel­len­bosch last month, the group dis­closed a 52% stake in CIC, which has been listed on the Namib­ian Stock Ex­change (NSE) since 1996.

How­ever, Pal­adin CEO Pierre Malan con­firms Pal­adin’s stake has been bol­stered to 63% in re­cent weeks and that an of­fer – pitched at 45c/share – had been ex­tended to mi­nor­ity share­hold­ers. The pro­posed buy­out val­ues CIC at around R100m.

Ba­si­cally, CIC is a hold­ing com­pany for a col­lec­tion of busi­nesses op­er­at­ing in the fast mov­ing con­sumer goods (FMGC) in­dus­try in south­ern Africa. Ser­vices – which gen­er­ate turnover of around R1,2bn/year – in­clude sell­ing, mer­chan­dis­ing, ware­hous­ing, dis­tri­bu­tion, debtors’ ad­min­is­tra­tion and staffing so­lu­tions.

CIC has en­dured a rocky ride on the NSE lately, with prof­itabil­ity fall­ing off markedly. But if CIC can again hit the lev­els of prof­itabil­ity seen in 2003 – when R25m or 14c/ share was earned at bot­tom line – a suc­cess­ful buy­out ef­fort could prove very re­ward­ing for Pal­adin.

Gut feel is that Pal­adin may be buy­ing into CIC just ahead of a sig­nif­i­cant up-tick in the busi­ness, which may irk some share­hold­ers faced with the buy­out of­fer.

On pa­per, it looks like Pal­adin’s get­ting a bar­gain. CIC’s latest net as­set value is stated as 71c/share, though CEO Trevor Rogers says that a re­cent “fair value” cal­cu­la­tion sug­gested the share was worth be­tween 45c and 51c.

The prob­lem for any re­sis­tant mi­nori­ties is that NSE reg­u­la­tions will al­low Pal­adin to delist CIC even if they don’t get 100% sup­port for their of­fer.

Malan says Pal­adin wants to delist CIC. “We have writ­ten to share­hold­ers – and that’s ex­actly what we’ve told them.”

Rogers says CIC ex­ec­u­tives are not yet aware of any share­hold­ers who are op­posed to Pal­adin’s buy­out of­fer, though Fin­week has picked up ini­tial grum­blings.

Though the CIC shares are illiq­uid, Rogers ac­knowl­edges that shares have been chang­ing hands lately – adding that top as­set man­ager Al­lan Gray had re­port­edly taken a stake in the busi­ness.

An of­fer to mi­nori­ties. Pierre Malan

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