POS­SI­BLE BUY­OUT TAR­GETS

Finweek English Edition - - Cover -

THERE ARE MANY com­pa­nies that listed over the past three years that must be tar­gets for a buy­out from ei­ther man­age­ment, pri­vate eq­uity or other preda­tors. Fin­week lists half a dozen stocks that could be bought out at cur­rent lev­els (even though we re­ally hope they hang around for much longer on the JSE): 1. MA­ZOR: At last week’s share price of around 120c this steel, alu­minium and glass en­gi­neer­ing com­pany is trad­ing at a for­ward earn­ings mul­ti­ple of un­der three times. The com­pany has a sub­stan­tial cash pile and can cer­tainly af­ford to make a gen­er­ous of­fer to mi­nori­ties, as its cash pile is sub­stan­tial. AFRIMAT: A very tempt­ing sit­u­a­tion. Even if its fi­nan­cial 2008 earn­ings are halved and re­main static for the next few years it would only take a few years

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6. of profit to re­coup the cost of buy­ing out mi­nori­ties at a good pre­mium to the cur­rent mar­ket price. IQUAD: At pre­vail­ing prices, wouldn’t it be bet­ter for ma­jor share­holder PSG to “tag and bag” this spe­cial­ist fi­nan­cial ser­vices op­er­a­tion? DI­A­LOGUE: Though up­com­ing fi­nan­cials to end-De­cem­ber 2008 should be re­veal­ing, the long-term po­ten­tial of this spe­cialised out­sourc­ing busi­ness must be more than its cur­rent 16c to 18c trad­ing range sug­gests. UNI­VER­SAL IN­DUS­TRIES: As one of the few new list­ings that has both­ered to buy back its shares, we won­der if Uni­ver­sal’s ex­ec­u­tives may not take the next log­i­cal step and make an of­fer for the shares they don’t al­ready own. SOUTH OCEAN: Like Di­a­logue, South Ocean’s fi­nals to end-De­cem­ber should be most re­veal­ing. The his­tor­i­cal earn­ings mul­ti­ple isn’t much more than one times – the kind of mar­ket rat­ing that prompts con­trol­ling ex­ec­u­tives to won­der “what the hell are we do­ing here?”

Hasen­fuss holds shares in South Ocean. ¤

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