Metrofile shuts book on offers
• Document management specialist says no progress has been made with two bidders
Document management specialist Metrofile, which has been subject to two buyout offers over the past two years, considers all such offers to be off the table now as no progress has been made with them. The provider of services for the storage, retrieval and dissemination of documents said talks with a US private equity firm stalled late in 2020 and another interested party dropped out of the race earlier this year.
Document management specialist Metrofile, which has been subject to two buyout offers over the past two years, considers all such offers to be off the table now as no progress has been made with them.
The provider of services for the storage, retrieval and dissemination of documents, among other things, said talks with a US private equity firm stalled late in 2020 and another interested party dropped out of the race earlier this year.
When Covid-19 took hold of the global economy early in 2020, the group, headed by former SAP boss Pfungwa Serima, was in the midst of a takeover by US-based Housatonic Partners, which made an offer at the end of 2019. At R3.30 a share, that offer was at a 43% premium to its share price of R2.30 at the time. The stock has rallied since.
At Monday’s close Metrofile shares on the JSE were 0.93% lower at R3.18, giving it a market value of R1.38bn. The stock is 14% firmer so far this year.
In March the company said another potential buyer, which made “an unsolicited approach” in December 2020, had withdrawn from discussions.
“There have been no further substantive interactions with
Housatonic or with other potential bidders and the board regards the process as terminated at the present time,” the company said.
Anthony Clark, an independent analyst at Small Talk Daily Research, said the news “may take away some of the shine from the Metrofile’s results”. However, he maintained his buy recommendation on the share, with a R4 target price”.
Metrofile reported revenue increased 3% to R933m for the full year to end-June. Its secure storage unit contributed 62%, down 2% year on year, mainly as a result of a reduction in servicerelated revenue such as handling fees and transport costs.
Geographic performance saw net box volumes down 1% in SA, but some was made back with 4% improved growth in the rest of Africa, and 46% in the Middle East. Digital services, one of the company’s new areas of growth, contributed 16% to group revenue, up 23% year on year mainly as a result of an increase in digital solutions.
Earnings before interest, tax, depreciation and amortisation rose 7% to R323m, from R302m previously “due to improved operational performance”.
Net debt continued to improve, falling 17% during the year to R434m, “which is significantly faster than the market was expecting”, Clark said. The market has been looking to Metrofile to reduce its debt and improve profitability, he said.
“At some point, given it has a much lower capex commitment going forward because it is moving away from physical document storage in its own properties to putting more of the documents we have to store in our everyday life ... all of that is moving to the cloud, which means much smaller operating costs for Metrofile and greater profit,” Clark said.
Metrofile ended the period with free cash flow up 42% to R184m, from R130m in the prior year, due to improvements in working capital and a reduction in capital expenditure “following enhanced focus on capital allocation”.
THERE HAVE BEEN NO FURTHER ... INTERACTIONS WITH HOUSATONIC OR WITH OTHER POTENTIAL BIDDERS
NET DEBT FELL 17% TO R434M ... WHICH IS SIGNIFICANTLY FASTER THAN THE MARKET WAS EXPECTING