of delist­ings trend?

Finweek English Edition - - Companies & Markets - MARc HASEN­FUSS

THE CON­TROL­LING SHARE­HOLDER of Ven­ter Leisure & Com­mer­cial Trail­ers (Ven­tel) has pro­posed buy­ing out mi­nor­ity share­hold­ers at 30c/share and delist­ing the com­pany from the JSE. A Sens an­nounce­ment on Mon­day, 27 Oc­to­ber said Ven­tel felt the scale of its busi­ness (an­nual turnover: R50m) doesn’t jus­tify a list­ing. “The board feels that the com­pany should de-list from the JSE in or­der to con­serve its lim­ited funds to grow the busi­ness.” Ven­tel was listed on the JSE in 1992.

Dun­rose In­vest­ments 143 – the nom­i­nee com­pany rep­re­sent­ing the Ha­mann fam­ily – al­ready owns 80% of Ven­tel and will only have to fork out around R3m to take out mi­nor­ity share­hold­ers. The of­fer price of 30c is well above its last traded price of 23c/share for Ven­tel – but it went as high as 55c/share on the JSE last year.

While Ven­tel isn’t ex­actly rolling in free cash (in fact, the Ha­mann fam­ily has funded the busi­ness for the past few years) the group has earned R6m from the sale of its axle-mak­ing sub­sidiary, Rubax. Ven­tel’s net tan­gi­ble as­set value grows from 27c to 36c/share af­ter the pro­ceeds of the Rubax sale are fi­nalised.

While the Ha­mann fam­ily’s buy­out of­fer is ef­fec­tively be­ing pitched be­low in­trin­sic NAV, we doubt too many mi­nor­ity share­hold­ers will be putting up re­sis­tance. Ven­tel, while in much bet­ter shape un­der the con­trol of the Ha­manns, seems un­likely to make ac­qui­si­tions or pay div­i­dends due to rel­a­tively high debt lev­els.

While the delist­ing of Ven­tel – which suf­fers from a se­ri­ous lack of trad­ing on the JSE – is an un­der­stand­able de­vel­op­ment, pun­dits may won­der how many other com­pa­nies are con­sid­er­ing sim­i­lar moves in light of pre­vail­ing mar­ket con­di­tions.

With many small cap shares trad­ing be­low in­trin­sic NAV or fair value, there must be a temp­ta­tion for direc­tors and ma­jor­ity share­hold­ers to pitch cheeky buy­out of­fers to mi­nor­ity share­hold­ers. Could Ven­tel be the first of many tilts at delist­ing by small cap com­pa­nies on the JSE?

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