A consortium led by Zahid Group is set to enter a new round of negotiations to acquire a controlling stake in South African construction equipment outfit Barloworld as part of a standby offer, after Barloworld shareholders rejected its initial offer for a full takeover over the pricing, Zahid Group Director of Investments Augostino Sfeir told Bloomberg. The initial offer failed to meet the 75% approval threshold among Barloworld shareholders, triggering a standby offer by the Zahid consortium at the same price.
Is this a creeping takeover in the making? The consortium is currently looking to acquire “as many shares as possible so that its stake exceeds 50%” in Barloworld, the business information service notes. This strategy suggests that the consortium could be angling for what’s called a “creeping takeover,” where the bidder starts accumulating shares over time until it has a majority stake that would then allow it to exert more pressure over minority shareholders to sell their shares.
What they said: “We are moving forward with the transaction even if we do not take the company private, we think a majority shareholding will allow us to implement more efficient processes in the business,” said Sfeir. “The standby offer has now opened, and we would like to conclude it within 30 trading days.” Zahid expects to acquire an additional 32% stake from shareholders in line with a vote at a previous extraordinary general meeting, he added.
No change in price, but lower premium: The offer price will remain at ZAR 120 a share, valuing the company at USD 1.25 bn, said Sfeir. While this was a 30% premium to the share price at the time of the initial offer in December, it’s currently only a 14% premium given the share price rose 7% up to ZAR 105 apiece on yesterday’s close.
Sweetening the pot for Barloworld’s biggest shareholders: Discussions with shareholder Public Investment Corp. — which had previously rejected the offer — will also include options to further invest in Black-ownership requirements, said Sfeir.
Shareholder Silchester International Investors could be left out of the new negotiations: Zahid will not give in to any of the points raised by Silchester in the first rejection which included raising the price to ZAR 130 apiece, and excluding the CEO from the negotiations, citing a conflict of interest. “The CEO forms part of our localization efforts, which is aligned with Caterpillar’s strategy, and he has a track-record of performance,” he said. “As long-term shareholders ourselves, we wanted the CEO to be able to continue to take care of operations and manage the business during a critical time like this,” said Sfeir.
Source: https://enterprise.news/ksa/en/news/story/2bd92fe7-43da-42f7-8580-e380a8dfee26/Zahid%20Group%20pursues%20new%20takeover%20talks%20with%20South%20Africa%E2%80%99s%20Barloworld
