Minorities’ buyout still on the cards
BELL EQUIPMENT: ALSO DE-LISTING FROM THE JSE Transaction is still subject to IA Bell’s proposed acquisition of John Deere’s 31.4% shareholding.
The proposed buyout of minority shareholders in Bell Equipment and the delisting of the JSE-listed manufacturer of heavy equipment for construction, mining and agriculture is still on the cards.
Bell Equipment advised its shareholders last month it had received a non-binding expression of interest from IA Bell and Company (Pty) Ltd, the private company majority-owned by the Bell family and currently a 38.7% shareholder in Bell Equipment, about a possible transaction to acquire – by way of a scheme of arrangement – the entire issued ordinary share capital of Bell Equipment not already held by it.
However, this possible transaction is still subject to IA Bell’s proposed acquisition of John Deere’s 31.4% shareholding in Bell Equipment becoming unconditional and being implemented, which will increase its shareholding in Bell Equipment to 70.1%.
IA Bell previously reached agreement with John Deere to acquire its 31.4% shareholding in Bell Equipment for R10 a share.
Bell Equipment chair and former group CEO Gary Bell said there are still one or two conditions precedent outstanding in the John Deere transaction, such as the regulatory requirements, including competition authority approval in various jurisdictions.
“Most of them are done but a few are outstanding. It’s quite unpredictable but I think all of the approvals could be done in a six-month period. We are about two or three months into this,” he said.
Gary Bell referred further questions about the proposed buyout of minority shareholders to Bell Equipment CEO Leon Goosen because he is conflicted and also not part of the independent board that is dealing with the proposed transaction.
Goosen said to date they have only received the non-committed intentions of IA Bell, but believe the John Deere transaction is getting closer to finalisation. He said it is unlikely any competition authority will have any issues with the proposed IA Bell and John Deere transaction.
Commenting on the rationale for the proposed buyout of minority shareholders and delisting of the company, Goosen said that Bell Equipment as a capital goods manufacturer has extremely long-term strategies that “don’t really care about financial yearends and global business cycles that also don’t care about our strategies”.
Goosen said Bell Equipment, for example, has for several years had a strategic intent to develop further intellectual property because as an original equipment manufacturer it is “a sort of a onetrick pony” with its articulated dump truck (ADT).
“We set out to design more products that we could manufacture that would help us with our overhead recoveries and costs and become countercyclical to the ADT market,” he said.
However, Goosen said it takes five to six years to bring these products to market for the first time because of the research and development as well as testing, ensuring its competitiveness and that it meets customer’s requirements.
Goosen said Bell Equipment has been explaining to shareholders and analysts how it plans to fix its profitability. If sales volumes fall from one year to the next, this cannot impact the number of engineers the company needs for longer-term projects, he said.