Protech slams door on Eqstra

PROTECH Khuthele has posted a circular dismissing a 60c-a-share offer for the company by Eqstra Holdings, a construction equipment leasing and contract mining group.

PROTECH Khuthele, a listed construction and engineering firm, posted a response circular to shareholders on Friday dismissing a 60c-a-share offer for the company by Eqstra Holdings, a construction equipment leasing and contract mining group.

This came after independent expert PricewaterhouseCoopers Corporate Finance last month said Eqstra’s offer to buy all shares in Protech it did not already own was “unfair and unreasonable”.

Based on “detailed valuation work and other considerations”, the independent expert had concluded the market value, on a controlling basis, of a Protech share was 79c-88c a share.

On Friday, Protech said its independent board reiterated its opinion that the Eqstra offer “significantly undervalued” the company and was “unfair and unreasonable”. It again “strongly recommended” shareholders reject Eqstra’s offer.

“I think, really, it’s confirmation of various things we have said in the past,” Protech CEO Antony Page said on Friday.

Eqstra had earlier formally bid to buy the remaining 67.2% of the construction company it did not already hold, saying that Protech would “benefit from the synergies and economies of scale that can be achieved by sharing resources”.

It had also said Protech had “underperformed”, despite having undergone a substantial turnaround process in the past 18 months. Earlier, Protech had called Eqstra’s action a “hostile takeover”.

“The independent expert’s valuation is the most significant part of the whole thing,” Mr Page said. “Firstly, it underscores the turnaround.” He also said Eqstra’s bid did not take into account the uptick in construction activity in SA. The government intended to spend R827bn on infrastructure over the next three years.

Eqstra already owned 32.8% of Protech and had secured a further 30.3% in irrevocable undertakings in support of its 60c offer.

It said in February the offer was a premium of 40.7% to the 90-day volume-weighted average traded price of Protech shares on the JSE on December 4, a day before Eqstra made known its unsolicited firm intention to acquire Protech.

Mr Page said that Protech’s independent board, which put out the circular, was looking for clarity that good governance and due process had been behind the unconditional acceptance of Eqstra’s offer by Protech’s empowerment partner, the Protech Khuthele BEE Trust.

Last month, Protech said legal opinion it had sought on this matter suggested its empowerment partner had no authority to dispose of its shares, which amounted to a 20% stake in the company.

On Friday, it said it now intended approaching the high court to have the irrevocable undertaking obtained by Eqstra from the trust set aside, and “to obtain such other relief as it deems appropriate”.

Eqstra CEO Walter Hill said on Friday his company’s “full and final offer” provided Protech shareholders with an “attractive cash price to realise fair value at a healthy premium”. He said: “We continue to receive acceptances from Protech shareholders and will update the market as the process continues.”

Eqstra wanted to cobrand itself with Protech and delist the firm to “ultimately” optimise value.