CET for the ‘Big one’
‘The General’ needs to find some really sharp teeth
THE LONG-AWAITED “merger” of listed security services company Command Holdings and Alexandra Security – owned by empowerment investor Cape Empowerment Trust (CET) – seems to be finally material- ising. Finweek hears only a few remaining issues about the proposed merger are outstanding. A source close to the deal indicates the mooted merger is still very much on the cards despite the long delay in finalising the transaction.
The deal most likely will see CET injecting its stake in Alexandra Security into Command in return for shares in the enlarged listing. By Finweek’s calculations the newlook Command should generate turnover of well over R200m – making it a slightly more compelling niche service stock.
Much of the intrigue about the longawaited deal will be centred on what price is placed on Alexandra Security, noting that Command (with a market capitalisation of less than R50m) has been comprehensively marked down in recent months on the JSE. After producing earnings of 7,7c/share in the year to end-June 2008, Command’s share has traded at a modest historic earnings multiple of less then five times.
CET currently owns a 24,4% stake in Command and you suspect that stake will shift up to around the 35% mark after the Alexandra deal. You might imagine Command CEO Shaffie “The General” Mowzer hoping to have the Alexandra deal finalised before the group’s AGM. Shareholders may also use the AGM to remind Mowzer about the promised “big deals” that would elevate the group into the top five biggest security companies in SA by next year.
Mowzer told Finweek recently that plans to grow Command’s operational base markedly by acquisition are still on track. No doubt, finalising the CET/Alexandra deal could be the trigger for further significant corporate action.
However, the market seems numb to those possibilities at Command – which is probably a function of the prevailing small cap malaise and the prolonged efforts at securing much needed corporate action. There may even be a case for claiming the ebullient Mowzer needs to walk the talk.
But Mowzer recently expressed satisfaction at Command’s progress. “One should remember when we took over Command seven years ago this company was a dead dog. Now we’ve managed to turn Command into a watchdog.”
All that remains to secure much needed market support is to give the watchdog some really sharp teeth…