Last Friday, Altron made the offer, its second in six years. Both Altech and Altron are listed entities.
The move sent Altech’s share price soaring by more than 30%. While the deal still requires 75% approval from minority shareholders, analysts believe it’s a fair offer and unlikely to encounter much by way of opposition.
Altron’s 2007 attempt to delist Altech was blocked by the largest minority shareholder, the PIC, which is government’s pension fund administrator, along with other, unnamed shareholders. The PIC holds 5,9% of Altech’s equity. This equates to voting rights in the scheme of 15,3%, insufficient to block the Altron offer on its own.
A PIC spokesman did not answer e-mailed questions about whether the organisation would support the offer this time around.
Kaplan Equity Analysts MD Irnest Kaplan says the offer is “fair”, but adds that it is “not an incredibly juicy deal”.
“It would appear to be a good deal because the share price has fallen so much, but if you looked at the share price six or eight months ago the offer wouldn’t seem so amazing,” Kaplan says. “But, looking at where Altech is with its businesses today, it’s quite fair.”
Kaplan says shareholders have two choices. They can choose to sell the share now — it was trading at R44,99 on Wednesday morning — when it “hasn’t quite reached the offer price” of R47,50/share, or wait for the deal to become unconditional, in which case they get the offer price.
Shareholders can elect take cash, or up to half in Altron shares. “If you’re a very long-term shareholder, who expects them to recover, it might be a good idea to take some Altron shares. But if you don’t want to wait, then you can take the cash and buy something else.”
Altron appears confident the deal will go ahead: it says roughly 59% of Altech shareholders have committed to voting in favour of the scheme. It’s unclear whether the PIC forms part of this figure. Altron needs 75% approval from minority shareholders in order to secure the buyout.
An analyst who asked not to be named because his company deals with both parties says that two of Altech’s biggest subsidiaries, Netstar and Autopage Cellular, are “end-of-life businesses” that could “keep deteriorating”.
“I think Altech is in a difficult position,” the analyst says. “If I were a shareholder, I’d take the cash not the Altron shares.” — (c) 2013 NewsCentral Media
- Image: Steven Tan/Flickr (adapted)