Value play or value trap?
Group Five rejected the R1.6bn cash offer from Greenbay Properties for Group Five’s European concession stakes, Bulgarian assets and Intertoll Europe operations. The reason behind the rejection was that the week given by Greenbay to accept the deal was not enough time to do a fair value assessment of the European assets, although suggestions are that R2bn is closer to fair value. It is interesting to note that at the time of the offer, the market cap of Group Five was around R1bn. So Greenbay values these European assets at more than the value of the entire company, placing a negative value on the other assets. So is the market very wrong or are these European assets the only value in Group Five? Value play or value trap? It’s hard to tell in large part because the group is loss-making with a number of issues outstanding (such as Ghana). But the adventurous may want to try a small position here, betting that the new board can unlock some value.