It’s time to take a view

The Holdsport deal is part of Joffe’s plan to boost Long4life’s value to R10bn, even as some shareholders of the specialist retailer dig in their heels

Long4life, the cash-flush investment company spearheaded by Bidvest founder Brian Joffe and former Famous Brands CEO Kevin Hedderwick, intends quickly growing its market capitalisation to R10bn from its current R2.4bn.

Joffe says Long4life’s aggressive growth plans should be taken into consideration when contemplating the company’s proposed takeover of specialist retailer Holdsport, the owner of Sportsmans Warehouse and Outdoor Warehouse.

Long4life has proposed an offer of 12.1 new shares in Long4life for each Holdsport share held; or 11.2 Long4life new shares and 500c/share in cash for each Holdsport share.

Long4life has claimed undertakings of support from 65% of Holdsport shareholders, but a few shareholders in the retailer may be digging in their heels.

The nub of the resistance is seemingly a valuation concern rather than a strategic issue. The deal requires Holdsport shareholders to give up their shares — which trade at a modest market rating and are underpinned by a generous dividend payout policy — for shares in Long4life that are perceived to be expensive.

Long4life, which has completed one deal in the form of beauty therapy specialist Sorbet since listing in April, is trading at a premium to its mostly cash-based assets.

But Joffe is adamant Long4life can do much more with Holdsport. “The company has been managed conservatively, and we think we can give it the growth momentum it deserves. From our point of view there is a base for expansion, especially in the outdoor space.”

Long4life raised R2bn at listing. The bulk of the proceeds are still intact, with the recent acquisition of Sorbet costing R116m in a shares and cash settlement. Joffe noted that Holdsport faced additional headwinds now that French sports goods giant Decathlon had entered the SA market.

Holdsport shareholders mulling the share swap proposal will need to take a view on Long4life — which is not easy at this early juncture, when the deal-making acumen of Joffe and Hedderwick arguably counts for more than the fundamentals.

Long4life is unapologetically adventurous, and has indicated a willingness to pursue opportunities across the “lifestyle” sector.

Joffe says: “We are an aggressive, opportunistic play.

“We are by no means conservative. If we succeed with the Holdsport transaction we’ll grow from R2.4bn business to over

R5bn. We want to play in the mainstream, so we want to get our business to over R10bn quickly.”

Aside from ongoing deliberations at Holdsport, last week Long4life issued a new cautionary notice advising shareholders it was in talks around another potential acquisition.