Following the somewhat eventful last two quarters of 2012, it has since been a rather painful journey tr ying to f igure out what is going on with Beige Holdings. Beige, a contract manufacturer of pharmaceutical and cosmetics products for major fast-moving consumer goods (FMCG) companies, was acquired by the privately owned The Lion Match Company in August last year. Lion Match paid R45m for the 35% stake formerly held by Thebe Investment Corporation, taking its holding in Beige to 79%. Lion Match also owns 100% of the issued preferences shares in Beige.
Established in 1905, The Lion Match Company, with its famous Lion Matches brand, has in recent times diversified its portfolio to include shoe polish as well as shaving and male grooming products. The strength of Lion Match is found in the extensive distribution network that it has in South Africa and surrounding countries.
The question, however, is whether this acquisition of Beige Holdings by The Lion Match Company would lead to a formation of the next big FMCG company. Finweek managed to get a word from Beige chairman, Gora Abdoola, about the plans Market cap P/E ratio EPS Dividend Dividend yield Shares outstanding R65.27m -4.66 -1.69 0.00 0.00% 1.63bn for the company.
“This acquisition will create the platform for Lion Match to grow into a top FMCG company. Beige has been a problematic company on the AltX Board for some time. The history of negativity has followed it. Lion Match will create a platform of stability. Obviously, there will be some teething problems and when Lion Match got involved, we discovered huge issues in controls and management. There were changes to the CEO, financial director and operational management as well. During the last 12-month period, a major cost-cutting exercise was done and proper controls that were lacking in various business units were installed.”
Lion Match is f urther looking at exploiting export opportunities, which Gora says had “dried up” due to a strong exchange rate. “However, the tide has turned and the favourable exchange rate has made exports lucrative once again.”
Lion Match’s initial plan was to delist Beige but that has since been shelved by the board. To cement its confidence i n Beige, Lion Match is going to underwrite a rights issue, which will be done in early 2014 to recapitalise the struggling AltX-listed counter.
According to Gora, “Beige is, at present, in a rebuilding phase. The share price will bottom out and will grow at a consistent pace as the company settles and beds down its costs. Shareholders are advised to watch this space as the turn in the company will be in this new financial year.”
VIEW ON THE COMPANY The company had done considerably well under the leadership of Mark Di Nicola (former CEO of Beige Holdings, now the company’s non-executive director). The mystery around the ins and outs of management, as well as the company strategy going forward, is a worrying factor. The shelved delisting and the planned rights offer point to a turnaround strategy which, we believe, can be realised with the muscle behind the Lion Match success.