Ellies Holdings has been given the green light by the Competition Commission to buy Bundu Power, a deal that Ellies has described as critical to its turnaround plans.
The JSE-listed company said in February that it had agreed to buy 100% of Bundu Power, a company founded in 2005 that specialises in alternative power solutions, for a maximum R202.6-million.
Ellies said at the time that it was buying Bundu Power, whose companies include Magetz Electrical and Power On Wheels, from owners Heidi, Nicholas and Suzanne von Broembsen, and Colin Sykes. Bundu Power focuses on the distribution and rental of generators and the installation of solar and ancillary products in residential, commercial, industrial, agricultural, hospitality and recreational environments.
“The commission has unconditionally approved the proposed transaction whereby Ellies intends to acquire Bundu Power,” the Competition Commission said in a statement on Tuesday.
“The commission found that the proposed transaction is unlikely to result in substantial prevention or lessening of competition in any relevant markets. The commission further found that the proposed transaction does not raise public interest concerns.”
Explaining the deal, Ellies said it is “repositioning itself as a smart infrastructure business, which will include comprehensive solutions for alternative energy, water storage and harvesting, connectivity, and smart home technology”.
“The acquisition of Bundu Power is the first building block of the new strategy and will expand the Ellies portfolio of alternative energy solutions. Ellies, in turn, provides Bundu Power with an expanded Southern African distribution network and access to a group with a level-2 broad-based black economic empowerment status.”
Ellies, Bundu terms
Ellies will buy Bundu Power for an initial payment of R72.6-million, with the balance of R130-million due over three earn-out periods.
In June, Ellies announced plans for a rights offer, in which it would seek to raise R120-million from investors to complete acquisitions aimed at transforming its business, including Bundu Power.
“To fund the initial payment, together with the earn-out for the 2023 financial year, the board of directors of Ellies has resolved to undertake a fully underwritten renounceable rights offer in the amount of R120-million through the issue of new Ellies shares at an issue price of 7c/share,” it said.
Mazi Assets Management and Imvula Education Empowerment Trust agreed to underwrite the rights offer on an equal basis, in consideration for an underwriting fee of 1.5% of the value of new Ellies shares, if any, subscribed for by each underwriter.
Ellies shares were changing hands at 7c on Tuesday, matching the rights offer price. – © 2023 NewsCentral Media