Barloworld’s shares bounced over 9% on Monday and Tuesday, taking it back towards the level at which it was trading before shareholders at the general meeting in late February rejected the R120-a-share offer from Newco, a consortium led by Saudi Arabian company Zahid Group.
The recovery in the stock appears to have been prompted by a Bloomberg story in which senior Zahid executive Augostino Sfeir said Newco would go ahead with the deal even if it did not get the targeted 90% acceptance rate. What’s more, it hoped to seal the transaction within 30 trading days.
However, late on Tuesday, in response to a request for comment, a spokesperson for Newco told Currency: “The statement made [by Sfeir] does not imply the waiver of any conditionality. The issue of conditionality and any possible waiver of such conditionality is at the discretion of the consortium. During the course of the standby offer should a decision be taken to waive the conditions, the market will be notified through the appropriate channels.”
Sfeir’s market-moving statement was in stark contrast to the information contained in a Sens statement released by Newco shortly after shareholders had rejected the initial scheme offer.
That Sens outlined the terms of the standby offer that faced shareholders. It was rife with uncertainty and the prospect that if they tendered their shares they might not receive payment until after September.
Central to that uncertainty was whether or not the consortium would waive the 90% acceptance condition it had imposed. The offer was also subject to obtaining approval from regulators, chief of which is the Competition Commission.
Wrapping the deal up
Yet in his statement to Bloomberg, Sfeir, who is head of investments at Zahid, seemed to clear up much of the uncertainty. “We are moving forward with the transaction even if we do not take the company private,” he said, adding: “We think a majority shareholding will allow us to implement more efficient processes in the business.”
Bloomberg reported that Zahid expects at least another 32% support from shareholders, taking its stake above 50%.
In other words, far from the long-drawn-out timeline contained in the Sens statement, the Saudi Arabian group appears to want the deal wrapped up promptly. “The standby offer has now opened, and we would like to conclude it within 30 trading days,” Sfeir told Bloomberg.
Understandably this was interpreted as good news by Barloworld shareholders who might feel R120 is an attractive price but were discouraged by the uncertainty. But South Africa has takeover regulations that dictate what can and cannot be said during a transaction. Making public statements that contain sensitive information that could influence the share price is precisely what the regulations aim to prevent.
This sort of information can only be disclosed through a Sens statement.
When approached for comment, Zano Nduli, the takeover regulation panel’s deputy executive director, told Currency the panel would review the issue and “revert as soon as possible”.
Meanwhile Barloworld shareholders are left wondering who’s really in charge.
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