The boat that rocked

Last Sunday was a day in a hundred in Kommetjie. Not a breath of wind and glassy sea as far as the eye could see. I dusted off my old Hammerhead surf-ski and lugged it down to the Kom for my first paddle in more than 15 years. My much-neglected craft, I discovered after launching, was not exactly seaworthy any more and the steering system was somewhat compromised. Had there been a bit more of a swell, my wonky rudder might easily have caused me to topple over into an armada of jellyfish basking ominously in the kelp forest. Still, good to get out — even if I now ache in muscles I forgot existed.

The JSE, however, was hardly a calm pond this week, and a variety of corporate actions are causing some serious ripples through the investment community. As I wrote in last week’s Fox section, there is something afoot at Adapt

IT, which is subject to two buyout offers: one for cash and one for scrip.

As observed last week, the share price — 651c at the time of writing — has passed through the 650c a share cash offer by Canadian technology group Volaris. To add further mystery, an intriguingly named hedge fund, Blacksheep Master Fund, has now taken a nearly 7% stake in Adapt IT. One has to ask, what are the chances then of a higher offer or even a third bidder emerging for Adapt IT?

Equally interesting was the emergence of a new shareholder at printing and packaging group Novus Holdings after anchor shareholder Media24 sold out its 17.48% stake. Last week I speculated (fortunately correctly) that A2 Investment Partners was the buyer of Media24’s Novus shares. I identified former Coronation Fund Managers asset manager Adrian Zetler as a key figure at A2. While that is correct, I have subsequently heard that one of the big backers of A2 is none other than André van der Veen, former Hosken Consolidated Investments (HCI) executive.

Van der Veen certainly knows a thing or two about unlocking value, having made HCI a small fortune from asset-rich liquor group KWV and alternative gaming group Niveus. I estimate Novus has a hard NAV of at least 700c a share, so there is plenty of potential upside on printing and labelling operations. I note the market is already giving A2 the benefit of the doubt at Novus. So, let’s see if A2 can rope in other major Novus shareholders — particularly Caxton & CTP Publishers & Printers and Value Capital Partners — to release value in the medium term.

Entry point to Africa

However, the really big splash in the deal-making pond was logistics giant Imperial’s sale of its South American shipping business to Hidrovias do Brasil for $90m or about R1.3bn. The deal was struck, from Imperial’s perspective, at a rather decent 9.6 times reported earnings before interest, tax, depreciation and amortisation for the 2020 financial year. This deal – which follows the sale of the European shipping business in August 2020 – speaks clearly to Imperial’s new mission to serve as the gateway to Africa. The remaining freight management and contract logistics operations within Imperial’s international logistics business are still up for sale. Hopefully the final terms are as good as the Hidrovias deal.

Meanwhile, logistics and industrial equipment group enX confirmed it would sell UK-based Impact Fork Trucks to the Monnoyeur Group, a French family-owned business, for £31m (R619m). That is equivalent to about 340c a share, or about 60% of enX’s market capitalisation. It’s worth remembering that enX in 2019 had a deal to sell Eqstra Fleet Management & Logistics to Bidvest for R1.3bn.

That fell through, I presume, because of changes at Bidvest rather than issues with the enX assets. If it’s safe to assume the Eqstra business (which earned R147m in the year to endAugust) can be sold at a similar price, enX — with a solid industrial equipment business and a petrochemical niche — looks a very sweet value play.

The JSE was hardly a calm pond this week, and a variety of corporate actions are causing some serious ripples