No let-up for corporate deal-making

Given that we’re in the middle of a pandemic with an accompanying lockdown that looks set to throttle most signs of economic life, it’s remarkable how much corporate deal-making is on the go.

It’s not just the emergency rescue stuff like Edcon’s carveup-and-sale and Sun International’s rights issue, there is also some mergers-and-acquisitions activity happening, such as Barloworld’s bid for an Asian-based business and Tsogo Sun’s sale of its Seychelles operation.

This might be an indication of the commendable resilience of the capitalist system, or of the disconnect between markets and economic reality. Although it could just be the determination of dealmakers to ensure they are generating fees no matter what.

Big deal

Of course, the biggest deal of all will be Prosus’s purchase of eBay’s classifieds unit, which – if it happens – is expected to come with a price tag of about $8 billion.

In the world of technology, it seems you either invent stuff or you buy stuff.

Naspers and its odd Amsterdam-listed offspring Prosus have plumped for the latter strategy and have oodles of cash to build up the “network effect” deemed so necessary to make profit in technology-based businesses.

The $8 billion that is being speculated by Bloomberg is just $800 million above the final cash offer Prosus made for UK food delivery business Just Eat late last year. That offer was rejected.

Tsogo

It looks as though Tsogo Sun has managed to make some money wisely with the R465 million sale of part of its Seychelles operation.

The market wasn’t too impressed – the news did help the share bounce, but only marginally.

Barloworld

Barloworld has been having quite a busy time on the deal front. It may be trying to get out of the proposed acquisition of Tongaat’s starch business – or just hoping for a cheaper price – but it seems keen to push ahead with its proposed R3.5 billion acquisition of Wagner Asia.

Meanwhile it emerged last week that Zahid Tractor and Heavy Machinery, which is part of the Saudi Arabia-based Zahid Group, has taken advantage of the Covid-19 depressed share price to buy up a 10% stake in Barloworld.

Sixty-eight percent of households reported worsening household income, with 32% seeing a slight reduction, a further 32% noting a big reduction and 4% where no one in the household is earning an income at all. In the R5 000R19 999 income band, 74% of households are earning less.

On a personal level, 57% of people have seen their income negatively affected. This includes 26% who are earning a “bit less” (either through a salary reduction or reduced hours), 23% who have seen a “very significant” impact

Among those older than 50, 63% report a worsening financial situation. Part of this, says Old Mutual, “would no doubt be due to increased anxiety as regards loss of value in retirement savings”. A shock such as the Covid-19 pandemic will have magnified the JSE’s underperformance for much of the past decade.

On the whole, 48% of consumers believe they are worse off financially than last year. Again, this number is higher among low-income earners (54%).

Only one in three doing ‘all right’ or ‘comfortable’

The barometer asked South Africans how they feel they are “getting by”. The results point to an increased struggle over the past six years, with stark deterioration

Third of consumers have requested payment holidays

Four in 10 people have explored or applied for debt relief for personal loans. This is followed by 35% of those with home loans asking for payment holidays, 29% of credit card holders, and 22% of store card customers seeking relief.

More than half of South Africans have dipped into savings to cope

The monitor says 52% have dipped into savings, more than double the 23% from last year.

Hilton Tarrant works at YFM