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Ghost Bites (African Rainbow Minerals | Bell Equipment | Copper 360 | Dipula Properties | Putprop)

The Finance Ghost
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Ghost Bites (African Rainbow Minerals | Bell Equipment | Copper 360 | Dipula Properties | Putprop)

Coal and iron ore negatively impacted African Rainbow Minerals – oh yeah, and PGMs (JSE: ARI)

Perhaps they will make an effort to learn how trading statements work

Last week, African Rainbow Minerals released a trading statement in the late afternoon and then their financials for the year ended June 2025 the very next morning. A trading statement is supposed to be an early-warning system that is triggered when a company is reasonably certain that earnings will differ by more than 20% from the prior period.

I promise you, not matter how hard a finance team works, they don’t go from
“reasonably certain” to ready to release audited results in the space of one night. It’s just poor financial disclosure and frankly not good enough. Trading statements should come out at least a week before final earnings and obviously as early as possible.

The silver lining to this story definitely isn’t the numbers themselves, with revenue up just 1% and HEPS down by a nasty 47%. The total dividend for the year was 30% lower at R10.50 per share.

Although the PGM basket price was slightly up and they saw an uptick in manganese ore and allow prices as well, it was thermal coal and export iron ore prices that really hurt them alongside the higher operational losses at Bokoni. The earnings volatility at individual metals level is something to behold, like headline earnings in iron ore down by 36% vs. manganese up 120%! The platinum business suffered substantial losses and contributed to the gloomy overall results.

Like so many other mining companies, African Rainbow Minerals has an eye on copper. The group has increased its stake in Surge Copper Corp to 19.9% as part of a strategy to increase exposure to the metal that everyone wants a piece of right now.

Due to the PGM exposure and the improved sentiment in the market around PGMs and the price outlook, the share price is up roughly 20% year-to-date. Whether or not this outlook translates into better earnings remains to be seen.

Bell Equipment’s cash flow looks better, but earnings went the other way (JSE: BEL)

But even then, there’s still no dividend

Bell Equipment has released earnings for the six months to June 2025. The market seemed to like them, with the stock closing 2.7% higher on the day at R41.83. So, only R11 or so to go until it gets back to the offer price of R53 that minorities voted down…

Will the share price get there? At some point, it probably will – but the real question is how long it will take and what the cost of capital is along the way, as R53 is effectively a moving target because of the time value of money and what investors could’ve done with that money in the meantime if the deal had been successful.

Let’s focus on the latest numbers, which have a substantial disconnect between profit and cash flow. Despite a 4% drop in revenue and a 43% nosedive in profit from operating activities, cash generated from operations increased by 29%. To confuse you further, HEPS was down by 23% and there’s still no dividend despite all that cash coming in!

A significant decrease in inventory was a major source of working capital unlock. This was offset to some extent by an increase in trade and other receivables due to extended payment terms and global trade uncertainty. Combined with the cautious overall outlook, the pressure on trade and other receivables might explain the lack of a dividend.

The biggest issue they seem to be facing at the moment is the impact of tariffs on South African and European exports. Bell has manufacturing facilities in South Africa and Germany, both of which are dealing with the same geopolitical issue! It actually sounds worse in the northern hemisphere, where they describe the outlook for those markets as “extremely challenging” vs. the southern hemisphere where demand is “under pressure” – narratives are subjective, but that sounds like a pretty clear hierarchy of concern to me.

One of the highlights is the roll-out of the new motor grader product to the Southern Africa market. Given the current geopolitical and tariff issues in the US, any growth in Africa is most welcomed by investors.

The inevitable Copper 360 rights offer is here (JSE: CPR)

This cannot be a surprise to anyone who was following the company

Copper 360 has had a tough time. The company has reported substantial losses and has missed revenue targets. In the last set of financial results, management referred to the company as an “undercapitalised exploration company” – short of actually hiring the Mavericks plane in Cape Town to fly around with a banner, I think the need for an equity capital raise was pretty well telegraphed.

The announced rights offer will look to raise R1.15 billion at 50 cents per share. The share price closed at 67 cents on Friday, so that’s certainly a discount, but by no means the worst I’ve seen.

Interestingly, R400 million of the rights offer is in the form of a new equity issuance (underwritten to the extent of R260 million), while R750 million will be a debt conversion. Another nuance is that this is a claw-back rights offer, a structure that I feel like I haven’t seen in ages. Essentially, the shares are first issued to the underwriter and then those who want to follow their rights “claw back” the shares from the underwriter until that portion of the rights offer has been exhausted.

Irrevocable undertakings for subscriptions of R90 million have been received. Together with the underwriting commitment, that covers off R350 million of the raise.

Then we get to the debt instruments – and there are a lot of them, with more related parties in this thing than you’ll find in an old Jerry Springer recording. There are a number of different types of preference shares and other notes, almost all of which will be converted into ordinary shares to simplify things. It looks like some of the royalty notes will be sticking around, subject to amended payment plans.

This capital raise is significantly larger than the current market cap of R480 million, so there is substantial dilution on that table here even for those who follow their rights, as the conversion of debt into ordinary equity is the largest portion of the capital raise.

Junior mining is not for the weak.

The Dipula Properties bookbuild was oversubscribed – but at a discount (JSE: DIB)

R559 million was raised in the space of a morning

As I wrote in Ghost Bites when this bookbuild was first announced, the power of the public markets is that they enable companies to raise vast amounts of capital in a very short space of time, provided they follow the approach of an accelerated bookbuild. Essentially, this opens the door only to institutional investors through a process in which the bookrunner phones up the various big hitters in the market and tests their appetite to buy more shares. Naturally, for parting with their capital on such short notice, those investors demand a discount. The extent of the discount will be based on how sought after the shares are and how much interest there is in the bookbuild. In other words, the discount is determined through market forces.

This is why you can have an oversubscribed capital raise that still closes at a discount price. There might be a lot of demand for the shares, but not if the discount goes away.

This is what has happened at Dipula Properties, with the planned raise of R500 million being increased to R559 million. To get it done, they needed to agree to a price of R5.43, which is a 4.86% discount to the 30-day VWAP.

Welcome to one of the major risks facing retail investors in the property sector on the JSE: your phone doesn’t ring when it’s time for a bookbuild. This becomes a bigger risk as the hype train gathers momentum, as eventually we reach a point where capital raising activity on the JSE is almost a weekly occurrence in the property sector. I don’t believe we are there yet, but I’m watching.

Putprop seems to have a good story to tell – so why don’t they tell it? (JSE: PPR)

Key metrics have moved in the right direction, yet the discount to NAV is vast

Putprop is one of the more obscure property companies on the JSE. If you look at their financial reporting, you’ll be thrown off by imagery of wildlife (including some equally obscure choices like dragonflies), with very little in the way of management commentary that might actually drum up some interest in the shares.

The market cap is R190 million based on the share price of R4.47. But the net asset value (NAV) per share is R17.77, so the group is much larger than the share price suggests. Well, in theory at least.

Once you look at the dividend, the share price makes a lot more sense. The dividend for the year to June 2025 was 15.5 cents, a tiny yield of 3.5% on the current share price. If you work out the yield on the stated NAV, you’ll likely have some valid questions about the valuations underpinning the NAV. You should then look at HEPS and how modest the payout ratio actually is, as HEPS was 60.86 cents in this period. Putprop functions very differently to the REITs that are more commonly seen in the market.

Still, key financial metrics have gone in the right direction. The loan-to-value (LTV) ratio is only 29.6%, a significant improvement from 36.9% a year ago. The dividend is up by 6.8%. Things are trending in the right direction.

The CEO and CFO are both retiring at the end of 2025. Could new management also mean a different strategy, perhaps one that is focused on addressing the discount to NAV? An entity associated with the retiring CEO is Putprop’s ultimate holding company, so it’s unlikely that we will see significant changes here unless there’s a mandate to do so from the controlling shareholder. Anything is possible though.

Nibbles:

  • Director dealings:
  • Assura (JSE: AHR) will be leaving not just the JSE, but the London Stock Exchange as well. This is because the Primary Health Properties (JSE: PHP) deal was such a resounding success that they got to a shareholding level that is sufficient for them to execute a squeeze-out, or a compulsory acquisition as the official term is known in the UK context. Essentially, this is because of a situation where the remaining number of shareholders is so small after an offer that it wouldn’t make sense for the company to stay listed, hence there’s a mechanism to force the remaining shareholders to accept an offer. This is similar to the outcome of a successful scheme of arrangement, but the route to get there is different.
  • PBT Group (JSE: PGB) is changing its name to PBT Holdings. It sounds like a small change, but it actually signals at intent to grow beyond just the PBT brand, as they already have other brands in the stable like CyberPro Consulting. The new share code will be JSE: PBT.

Everybody loves a good brand rivalry

Dominique Olivier
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Everybody loves a good brand rivalry

Whether the medium is sport, politics, or pop culture, one thing is for sure: human beings gravitate towards conflict. Brands know this, and that’s why, every so often, they take off their gloves and enter the ring.

On the surface, advertising is about selling products. A clever slogan here, a striking image there, and (if the marketers are lucky) a jingle that worms its way into public memory. But occasionally, advertising transcends the transaction. It becomes theatre. And the most reliable script is not a brand talking about itself, but a brand squaring up against an adversary. Rivalries, after all, are irresistible.

A month after American Eagle released its Sydney Sweeney campaign, the fashion world was still buzzing. The spot was, at first glance, simple: Sweeney, dressed in jeans, recites something that sounds like a biology lesson. “Genes are passed down from parents to offspring, often determining traits like hair colour, personality and even eye colour. My genes are blue.” A pause. Then a voiceover: “Sydney Sweeney has great jeans”.

Cute wordplay, yes – genes/jeans – but wordplay with unintended echoes. Social media critics pointed out that the line blurred the distinction between jeans and genes in unsettling ways. Instead of focusing on denim, it seemed to allude to inherited traits, sparking conversations about eugenics and racial undertones. Was the ad talking about Sweeney’s jeans – or her genes?

The backlash was swift. Some defended the ad as harmless punning, while others condemned it as tone-deaf, particularly in the context of the current political climate in the US (read: a little bit testy). Either way, American Eagle had done what most marketers only dream of – they had people talking about jeans in a cultural moment dominated by anything but fashion.

But just as the dust began to settle, Gap stepped forward.

Their “Better in Denim” campaign debuted with a markedly different tone. Gone were genetic metaphors. Instead, Gap enlisted KATSEYE, a global girl group with members from South Korea, the Philippines, Switzerland, and the United States. The ad featured the group and a diverse clique of backup dancers moving exuberantly to Kelis’s Milkshake. The chorus landed like a pointed jab: “Damn right, it’s better than yours”.

Where American Eagle flirted with controversy, Gap opted for diversity and TikTok-ready spectacle. The effect was less apology than counterpunch. In the war for denim supremacy, Gap had officially thrown its hat back into the ring.

And nobody was talking about competitors like Levi’s. Interesting.

Why do rivalries work?

Rivalry isn’t just competition. It’s narrative. And humans are wired for stories.

Think about the way Samsung takes aim at Apple or how Burger King constantly needles McDonald’s. To consumers, these moments feel like episodes in an ongoing saga, complete with familiar characters locked in a struggle for dominance. Psychologists even have a term for this phenomenon: the “rivalry reference effect”. By referencing a well-known competitor, a brand taps into a narrative that audiences already recognise, which makes the message land with greater force and resonance.

What’s fascinating is that research suggests negative messaging in these rivalries doesn’t carry the same risks that it might in other contexts. If a brand were to attack a company outside of its established rivalries (for example, if Burger King took aim at a small-town burger shop), the tactic could easily come across as petty or mean-spirited. But when the barbs are aimed at a recognised nemesis, loyal customers don’t just tolerate it – they relish it. They see it as playful, part of the game, and often take pride in their chosen brand’s boldness. Rivalry gives fans bragging rights, and it turns sarcasm into sport.

The magic of brand rivalries is that they operate in a space where drama is not only accepted but anticipated, where teasing feels like tradition rather than hostility. In this zone, advertising begins to look a lot like entertainment. And when brands go to war, consumers don’t just sit back as passive spectators – they jump in, share the content, and become part of the story themselves.

A distinctly German rumble

Few industries embody rivalry better than automobiles. In 2009, a billboard war erupted in California between Audi and BMW. Audi struck first, plastering a billboard with the tagline: “Your move, BMW”.

BMW’s countermove was swift and cheeky. They put a bigger billboard right beside Audi’s, showing a 3 Series with the single word “Checkmate”. Audi retaliated with an even larger billboard of its R8 supercar, captioned: “Your pawn is no match for our king”.

Then BMW escalated again. They paid for a blimp featuring the BMW V8-powered Sauber F1 car and a “Game Over” text to hover over the billboards (if this had been in Cape Town, they no doubt would have enlisted the Mavericks plane). Fortunately sense kicked in (or marketing funds dried up) at that point, and a temporary truce was called.

But the rivalry didn’t stop at America’s coasts. Two decades earlier in South Africa, Mercedes and BMW locked horns in a battle that became national lore.

In 1990, Mercedes-Benz aired an ad dramatising the true story of Christopher White, who survived a 100-metre plunge off Chapman’s Peak thanks, he said, to two things: his seatbelt and his Mercedes. The commercial recreated White’s accident, ending with “Engineered like no other car in the world”. For Mercedes, it was a triumph of storytelling and engineering pride.

BMW’s reply was nothing short of audacious. On the very same stretch of Chapman’s Peak, they shot their own ad. This time, the BMW driver approached the bend confidently, took it without incident, and drove smoothly on. The closing line landed like a punch: “Doesn’t it make sense to drive a luxury sedan that beats the bends?” The pun – Benz versus bends – was impossible to miss, and impossible to forget.

The campaign sparked debates, legal challenges, and widespread public fascination. The BMW ad was quickly pulled from circulation (it was cleverly aired for the first time on a Friday afternoon, which meant that it played all the way through the weekend before regulators reached their desks on Monday morning), but by then the cheeky ad had already done its work. It had captured national attention, stirred emotion, and achieved what every marketer dreams of: becoming a cultural talking point far beyond the confines of a 30-second spot.

Nandos: always spoiling for a fight

The year is 2012. Oscar-winning actor Ben Kingsley is centre stage as the camera zooms in. Dressed in a sharp suit and standing at a bar, he sets up a scenario: you’ve read your insurance contract carefully, line by line. But then he poses a question – could you have missed something important? He points out that during the one-minute ad, the barman’s outfit has changed four times without you noticing. It’s a clever reveal, part of Santam’s “Real McCoy” campaign, designed to highlight how easy it is to overlook the fine print.

But Nando’s wasn’t about to let Santam have the limelight. Known for two decades of parody and satire, the fast-food chain couldn’t resist spoofing Santam’s concept. Their version of the ad mirrored the tone and setup, except this time the background gag was the constant switching of Nando’s meals on the bar counter. 

The real surprise came not from Nando’s, but from Santam. Instead of bristling at the parody – as most insurance companies would – Santam actually leaned into the joke. King James, the agency behind Santam’s ads, quickly produced a witty sequel titled “Back at ya.” In it, “Kingsley” responds to Nando’s by saying Santam was flattered to be “cribbed,” but they would only forgive the indiscretion if Nando’s met a rather unusual list of demands. Among them: 62 lemon and herb half chickens with chips and coleslaw, all to be delivered to the Johannesburg Children’s Home by a certain date.

This kind of playful back-and-forth is almost unheard of in South African advertising. Comparative ads are technically illegal, and companies often race to the Advertising Standards Authority if they feel even vaguely mentioned. But because Nando’s and Santam aren’t competitors, the spoof was received as a compliment rather than a threat. The result was a rare win-win. Both brands gained attention, and the Johannesburg Children’s Home walked away with not only the delivery Santam demanded, but also Nando’s promise of free monthly meals for each child for a year.

Taking the fight to them

Rivalry transforms advertising into drama. The characters are familiar – Coke and Pepsi, Mercedes and BMW, McDonald’s and Burger King – and the stakes are never really life or death. Yet we invest in them, because rivalry speaks to something primal. It’s the same instinct that makes us choose sports teams or political parties. It gives us sides to pick, victories to celebrate, and defeats to mock.

For brands, rivalry is risky. Done poorly, it looks mean-spirited. Done well, it’s unforgettable. What matters most is the authenticity of the contest. Consumers can sniff out manufactured drama, but when rivals with genuine history spar, the sparks feel real.

Which brings us back to denim. American Eagle and Gap may never achieve the mythical status of Coke versus Pepsi, but their clash reveals how the playbook still works. American Eagle stumbled into controversy, provoking conversation but also confusion. Gap answered with a global pop act, diversity, and a knowing soundtrack. Both brands gained attention in the process. Both reinserted themselves into a cultural conversation. And in an industry where relevance is as valuable as revenue, that may be victory enough. 

Because again, nobody seems to be talking about Levi’s…

About the author: Dominique Olivier

Dominique Olivier is the founder of human.writer, where she uses her love of storytelling and ideation to help brands solve problems.

She is a weekly columnist in Ghost Mail and collaborates with The Finance Ghost on Ghost Mail Weekender, a Sunday publication designed to help you be more interesting. She now also writes a regular column for Daily Maverick.

Dominique can be reached on LinkedIn here.

PODCAST: No Ordinary Wednesday Ep108 | Striking gold in global markets

Investec No Ordinary Wednesday
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PODCAST: No Ordinary Wednesday Ep108 | Striking gold in global markets

Listen to the podcast here:

The six resources stocks among South Africa’s “Magnificent 10” are shining on the back of gold and platinum strength, but can the rally withstand US inflation, China’s demand shifts and local logistics woes?

Host Jeremy Maggs asks Osa Mazwai, investment strategist at Investec Wealth & Investment International and Campbell Parry, commodities and natural resources analyst at Investec Investment Management in this episode of No Ordinary Wednesday.

Hosted by seasoned broadcaster, Jeremy Maggs, the No Ordinary Wednesday podcast unpacks the latest economic, business and political news in South Africa, with an all-star cast of investment and wealth managers, economists and financial planners from Investec. Listen in every second Wednesday for an in-depth look at what’s moving markets, shaping the economy, and changing the game for your wallet and your business.

This image has an empty alt attribute; its file name is Investec-banner.jpg

Also on Apple Podcasts, Spotify and YouTube:

Ghost Bites (African Rainbow Minerals | Anglo American – Valterra Platinum | Ascendis | Dipula | Fortress Real Estate | Pan African Resources | Sanlam | Trellidor)

The Finance Ghost
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Ghost Bites (African Rainbow Minerals | Anglo American – Valterra Platinum | Ascendis | Dipula | Fortress Real Estate | Pan African Resources | Sanlam | Trellidor)

A really tough period for African Rainbow Minerals (JSE: ARI)

But why is the trading statement coming out the day before earnings?

African Rainbow Minerals released a trading statement dealing with the year ended June 2025. It’s been an ugly time for them, with HEPS down by between 45% and 55% vs. the prior year.

The problem is mainly the decrease in the average realised export USD iron ore price, along with increased mechanised development costs at Bokoni.

Full details will be available on 5th September – yes, the day after the trading statement was released. It’s really disappointing when companies release trading statements so close to the release of results. A trading statement is supposed to be an early warning system for moves of over 20%, not a “whoops we forgot” the day before.

Not good enough.

Anglo American is out of Valterra Platinum (JSE: AGL | JSE: VAL)

Such is the power of deep public markets

You’ll often hear about how small-caps (and even some mid-caps) struggle for liquidity in their stock, with thin trade (i.e. low volumes) and wide bid-offer spreads that can be very problematic to solve. At the other end of the spectrum, we find the largest companies on the market and the immensely deep capital markets that they enjoy.

Not there that was ever any doubt, but the results of the accelerated bookbuild involving Anglo American’s stake in Valterra Platinum shows us that Valterra is firmly in the latter bucket. Anglo hired several banks to make sure that the placement was a success and would attract the best pricing possible.

So, speaking of price, just how hard was Anglo American pushed by the investors? The answer is: fairly hard actually. Valterra Platinum closed at R895 on the day and Anglo sold its remaining 19.9% stake at R845 per share. That’s a 5.6% discount to the closing price on the day.

This raised R44.1 billion for Anglo American. To be clear, the deal may involve Valterra shares, but the proceeds from the sale don’t go to Valterra.

Ascendis released its first numbers as an investment holding company (JSE: ASC)

The share price is trading at a relative modest discount to NAV

After a lot of noise around the shareholder register and a potential take-private of Ascendis that didn’t happen in the end, the company has now released results for the year ended June 2025. They have changed their accounting approach to one of investment holding company accounting, which means they value the underlying portfolio of assets rather than produce consolidated accounts with all the individual line items in the income statement and balance sheet.

This severely limits comparability with the prior year’s numbers. So, we can focus instead on the the new line in the sand (tangible net asset value per share of 100 cents) and the management narrative. By the way, the share price is trading at R0.85, so that’s a discount to TNAV of only 15% – that’s small by investment holding company standards.

The Medical Devices business seems to be enjoying growth in demand, but they are struggling to get paid by some public hospitals. Surprise surprise. If there’s one thing government really hates doing, it’s paying on time. In the Consumer Health business, they get paid by their customers, but they don’t have enough customers thanks to macroeconomic pressures.

It’s clearly a grind at the moment, but they are grinding in the right direction overall. Such is life in South Africa.

Dipula taps the market for R500 million (JSE: DIB)

And so the capital raising trend continues

There’s been a clear uptick in the number of property funds raising equity capital. This makes sense, as valuations of these companies have moved higher in recent years (certainly vs. pandemic levels) and it is always better to raise capital from a strong market rather than a weak one.

I don’t believe we are there yet, but eventually we could reach a point where these raises are happening practically weekly in the sector. That’s when we’ve hit danger zone for valuations.

The latest raise is by Dipula for the sum of R500 million, which they will achieve through an accelerated bookbuild process.

The capital will be used for the acquisition of Protea Gardens Mall and other recently announced deals. This type of activity is precisely why property funds are listed, as the markets give them access to substantial capital.

Solid growth at Fortress Real Estate and expectations for it to continue (JSE: FFB)

The sector is enjoying stronger support from investors

As mentioned in the Dipula section above, the property sector is in a much better place this year and companies are raising capital accordingly. This sentiment comes through clearly in the Fortress Real Estate results for the year ended June 2025, where the total dividend per share was up 7.1%. Aside from growth in income from the properties to fund this dividend, Fortress enjoyed a 6.5% like-for-like increase in property valuations.

I’ll say it for the millionth time: there is no world in which I would own a buy-to-let investment with all its headaches instead of listed property shares. I would buy my forever home, but only so I can live in it. Property as an investment is a dish best served on public markets in my opinion.

Fortress has given guidance for the 2026 financial year that suggests more of the same returns to shareholders, with expected growth in distributable earnings per share of between 6.0% and 7.5%. Their balance sheet is in great shape heading into the new year, with a loan-to-value ratio of 39.1%.

One thing to note is that you must always look at earnings growth on a per-share basis, especially in a climate where many property funds are now issuing shares. The narrative will often be around “total earnings growth” rather than “total earnings per share growth” – and the former tends to be much higher than the latter in an environment of capital raising. For example, Fortress notes that the total distribution was up 9.4% for the year, but doing the maths on a per-share basis reveals growth of 7.1%.

Speaking of the dividend, shareholders have the choice to receive the dividend in cash or in the form of NEPI Rockcastle (JSE: NRP) shares, with Fortress still holding a substantial stake in the Central and Eastern European giant.

Pan African Resources worked out well this year in the end (JSE: PAN)

I bought the market panic in February and I’m glad I did

The market can sometimes throw you a Lululemon (IYKYK), while at other times it gives you a gift like the silly market response to Pan African Resources‘ interim earnings back in February. I was looking for a gold position and I jumped in at the time. I’m up 85% on that position, so that’s worked out well!

The thesis was that although Pan African had a disappointing interim period, they were looking to bounce back strongly in the second half. I’ll wait for full details in the earnings, but it looks as though they had a solid finish to the year. A trading statement dealing with the year ended June reflects a jump in revenue of 44.5% and in HEPS of between 37% and 47%.

The revenue growth was thanks to a 6.5% increase in gold sales and a 35.7% increase in the average USD gold price.

Importantly, the group’s legacy gold price hedges fully rolled off the book by the end of June, so they are now enjoying the full benefit of the gold price. That benefit isn’t in these numbers, but will come through in the next interim numbers.

I’m holding. I think it’s hard to justify having zero gold exposure in the current environment.

Strong underlying growth in Sanlam, but not at HEPS level (JSE: SLM)

The return on shareholders’ fund is a huge component of earnings

There’s an interesting shape to Sanlam’s earnings for the six months to June. The core business did well, with the net result from financial services up by 14%. Despite this, HEPS was actually down 2%. I’m not sure why, but Sanlam doesn’t make it obvious that this is HEPS from total operations, rather than continuing operations. You have to really dig to find that HEPS from continuing operations was up 1.3%.

That’s still obviously much lower than the result from financial services, with a few reasons for this including a substantial negative trend in the return on shareholders’ funds (the other major component of earnings for the insurance group).

There’s some very complex stuff that sits inside that move, including the “asset mismatch reserve” that I’m sure gives a few actuaries a daily headache. The point is that the return on shareholders’ funds won’t move in a straight line, as it reflects a huge number of global market factors.

To judge the maintainable performance of Sanlam, it’s helpful to look at the net result from financial services and its underlying drivers. For example, total new business volumes were up across all the major insurance offerings, although value of new business margins did come under pressure.

There were a few detractors from performance in the life insurance business, like changes made to Glacier and the cessation of the Capitec joint venture. Heading into the second half of the year, Sanlam is hoping that strategies like the Assupol integration will help close the gap.

As we saw when Santam (JSE: SNT) released results and certainly at its competitors as well, short-term insurance has been having a great time. This has also been reflected in Sanlam’s Pan-African and Asian short-term insurance businesses.

It’s great to see that net cash client inflows in the investment management business were positive, thanks to Satrix and the multi-management businesses.

Still, we can’t ignore the group trend, which was a significant dip in adjusted return on group equity value per share from 22.5% to 15.4%. Sanlam’s share price fell 3.5% on the day, taking the year-to-date drop to 4%.

More tough numbers at Trellidor, but the balance sheet looks much better (JSE: TRL)

There’s even a dividend!

Trellidor has had a really difficult few years. There are signs of recovery, with the share price up 27% year-to-date. The problem is that it all happened in February, with choppy sideways trading since then.

Life isn’t easy for small caps, especially those with a negative earnings trajectory. For the year ended June 2025, Trellidor suffered a drop in HEPS of 14% to 31.5 cents. The share price closed at R2.05 on Thursday, which means a Price/Earnings multiple of 6.5x – hardly a bargain when earnings are dropping.

What is the market seeing here that is supporting the share price? The answer can be found on the balance sheet, where net debt has been reduced by 38.4%. This drove a 30.3% reduction in finance costs. This was made possible by a 30.1% increase in cash generated from operations.

That’s all good and well, but the company is still suffering a demand problem. Right here in South Africa, revenue fell by 7.8%, with a particularly weak finish to the year. In the UK, due to the timing of a once-off project in the base, revenue was down 14.7%. If you exclude projects, revenue was up 55% on last year in the UK.

In a manufacturing business, when revenue drops, profits come under substantial pressure due to the presence of fixed costs in the manufacturing base. Or, put another way, operating leverage works against you.

Can they get things to head in the right direction? With the decision to sell Taylor and NMC to focus the group and unlock a further R51.9 million, they will be sitting on a balance sheet that should let them sleep peacefully at night – such is the brand promise of Trellidor’s products! But those products themselves are the worry these days, as they need to quickly change the trajectory of the business to avoid getting into trouble once more.

As a show of confidence, a dividend of 12 cents per share has been declared. I understand that they are trying to put on a brave face here about the underlying business, but I think that caution might still be the best approach when it comes to capital allocation. Once the dividend returns, investors expect to see it every year.

Nibbles:

  • Director dealings:
    • The CEO of RCL Foods (JSE: RCL) bought shares worth nearly R530k. That’s a strong show of faith based on the recent results.
    • An associate of the chairman of KAP (JSE: KAP) bought shares worth just under R200k.
  • Blu Label (JSE: BLU) – note the new spelling and shortened name – released an update on the restructuring of Cell C. They’ve achieved a critical milestone in the form of the Competition Tribunal granting conditional approval for the acquisition by Blu Label’s subsidiary of a further 4.04% stake in Cell C. This takes the stake from 49.53% to 53.57%, which makes Blue Label the controlling shareholder. Importantly, the conditions that form the basis of the Competition Tribunal approval are acceptable to Blu Label.
  • Texton (JSE: TEX) has previously taken the approach of investing excess capital in offshore funds rather than doing share buybacks, even when its stock has traded at a deep discount to net asset value. This has been going on since 2022. The company has made the decision to fully exit the offshore fund, which means R111 million will flow back to them. Adjusting for dividends and last year’s redemptions, the total return over 3 years is just over 30% – or below 10% a year on a compound basis. They refer to this as a “strong overall return profile” – I personally prefer to invest in management teams who don’t aim for government bond returns as “strong” uses of capital.
  • Nampak (JSE: NPK) has announced that COO Andrew Hood, who was appointed earlier this year as part of a succession plan to replace Phil Roux as CEO, has resigned from the company for personal family reasons. This has led to the extension of Roux’s term as CEO (the announcement doesn’t specify to what extent), as the company now needs to start again with finding a suitable successor.
  • Before you wonder where on earth a new company in your portfolio suddenly popped out from, Capital Appreciation Limited (JSE: CTA) will change its name to Araxi Limited with effect from 6 October. The new share code will be JSE: AXX.
  • I’m not sure how much can be read into this from a succession planning perspective, but Bell Equipment (JSE: BEL) announced that Stephen Jones (business development and sales executive) has been appointed as alternative executive director to CEO Ashley Bell. Avishkar Goordeen is therefore no longer the alternate director to the CEO, but will be the alternate to the group finance director instead. The company says that the changes are to align the director positions with their areas of expertise and responsibility.
  • Shuka Minerals (JSE: SKA) had to release a rather awkward announcement about the acquisition of Leopard Exploration and Mining and the Kabwe Zinc Mine in Zambia. The company announced on 1 July that the conditions to complete the acquisition had been met, leading to a notice to draw down funds from Gathoni Muchai Investments (GMI), the entity providing the $1.35 million in funding to complete the deal. GMI has now informed the company that the funds have been delayed due to administrative matters and regulatory clearances in Kenya. GMI hopes to solve this (with either the existing approach or a new one) within 10 business days. GMI has stressed that this is purely an admin thing, not a reflection of their capacity to meet their obligations. Separately, the company noted that it is still working on a sale of the 60,000 tonnes of fines that have been stockpiled at the Rukwa operation in Tanzania. So, lots of uncertainty and things going on here, as is pretty much always the case when it comes to mining in Africa.

African M&A Analysis H1 2025 (excluding South Africa)

Marylou Greig
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African M&A Analysis H1 2025 (excluding South Africa)

The total value of M&A deals captured for the continent during H1 2025 (excluding South Africa) was a mere US$4,66 billion, down 16% year-on-year, and 61% off the levels seen in H1 2022.

Deal volumes echoed this decline – down 21% on 2024 deal flow, and 68% off levels registered in 2022. Two deals in the energy sector topped the deal table by value for the period at $2,16 billion – almost half the total deal value for H1.

Analysis of private equity investment in Africa over the past four years mirrors this steady decline, amid challenges brought about by a mix of global macro pressures, regional risks, and shifts in investor strategy.

While not unique to Africa, rising global interest rates, a strong US dollar and geopolitical uncertainty have seen international investors retreat to safer, higher-yielding markets. For Africa, where private equity funds remain heavily reliant on offshore capital, this has translated into weaker fundraising and a more selective deployment of capital.

Currency volatility, energy insecurity, and political uncertainty in key economies such as Nigeria have added to the caution. African institutional capital remains underdeveloped, with African GPs heavily reliant of foreign backers. Subdued IPO markets, together with limited trade buyer activity, continue to constrain exit opportunities – a critical factor in investor appetite.

Added to this has been the correction in technology and fintech valuations; these sectors were central to the surge in 2022. The shift in global sentiment and a redirecting of attention to more defensive opportunities in healthcare, agriculture, food value chains and logistics has cooled valuations and deal appetite, reflected in the lower deal volume.

However, on a positive note, the long-term story remains intact, and the cycle will turn. Africa’s demographic dividend, rapid urbanisation, and the pressing need for investment in energy transition, infrastructure and healthcare continue to underpin opportunity. All that is needed is patient capital, and Africa’s fundamentals will ensure it remains firmly on the radar, with the current environment presenting entry points at more attractive valuations.

The latest magazine can be accessed and downloaded from the DealMakers AFRICA website

DealMakers AFRICA is a quarterly M&A publication
www.dealmakersafrica.com

Who’s doing what this week in the South African M&A space?

Marylou Greig
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Who’s doing what this week in the South African M&A space?

Exchange-Listed Companies

Prosus Ventures has led a US$12,5 million Series A round in Intella, a leader in dialectal Arabic speech intelligence. 500 Global, Waed Ventures, Hala Ventures, Idrisi Ventures and HearstLab also participated in the round alongside Prosus. The investment will accelerate Intella’s mission to power a digital AI workforce across the Arabic-speaking world. The engine can transcribe speech from 25 different Arabic dialects with a 95.7% accuracy rate.

Invicta via its subsidiary Invicta Global is to acquire 100% of the Spaldings Group of Companies. Spaldings is a distributor of agricultural and ground care components in the UK, known for its extensive range of high-quality replacement parts and machinery. The purchase consideration payable is £11,86 million (R282,16 million) – the deal is a category 2 transaction and as such does not require shareholder approval.

Blu Label Unlimited, as it is now known, has released details of the intended restructuring of its operations with the end goal of listing Cell C. Via its wholly-owned subsidiary The Prepaid Company (TPC) which, pre-restructure, holds a 49.53% stake in Cell C, Blu Label will implement a series of agreements which will see the conversion of debt claims to equity valued at R3,68 billion; the transfer of Comms Equipment Company to Cell C in exchange for Cell C shares to the value of R2,15 billion; the transfer of airtime with a value of c.R7,4 billion and; the acquisition by TPC of Cell C shares held by SPV4 and SPV5 of 10.47% and 10% respectively in relation to debt obligations to TPC with a value of R563 million. The final step will see the remaining Cell C shareholders dispose of these shares to Cell C ListCo in return for the issuing of ListCo shares. TPC will, simultaneously to the Cell C ListCo listing, sell-down its shareholding to qualifying investors such that TPC will hold not less than 26% of Cell C Listco. Following the detailed announcement, Blu Label has received conditional approval from the Competition Tribunal to acquire an additional 4.04% shareholding in Cell C from Cedar Cellular Investments 1 (RF) for an undisclosed sum. This increases TPC’s shareholding in Cell C from 49.53% to 53.57%, establishing TPC as the controlling shareholder.

Santam has acquired a 51% stake in Avatar, a new UK-based start-up with a unique technology platform that can underwrite and price mid-sized corporate risks more efficiently than traditional methods. The price tag of £3 million was funded from the group’s available cash resources. Santam will not initially deploy any underwriting capacity to Avatar but depending on a successful track record being established, the startup may become a source of future new business for Santam.

Fortress Real Estate Investments has entered into an agreement to acquire an industrial property in Wroclaw, Poland for €49 million.

The finalising of the acquisition of Leopard Exploration and Mining and the Kabwe Zinc mine by Shuka Minerals, announced in July 2025, has been hindered due to the delay in the remittance of funds in the form of a loan from Gathoni Muchai Investments. Obtaining the required regulatory clearances in Kenya is the reason given for the delay. Alternative means are being explored to expedite payment, with the sellers remaining supportive of progressing the acquisition to completion.

In September 2024 Shoprite announced the disposal of its furniture businesses operating in SA, Botswana, Lesotho, Namibia, Eswatini and Zambia to Pepkor for c.R3,2 billion. The proposed transaction was approved by all relevant authorities in the applicable non-South African territories, and a positive recommendation was made by the South African Competition Commission to the South African Competition Tribunal. However, subsequently Lewis was granted the rights to intervene in the matter. This has resulted in a delay of the proposed transaction with Lewis lodging an appeal with the Competition Appeal Court.

Barloworld’s standby offer has now received the Botswana Competition and Consumer Authority approval for the implementation of the offer with the only outstanding approvals required from COMESA and in Angola and Namibia. Should these not be received by 11 September, the longstop date will automatically be extended by three calendar months. The offer remains open for acceptance by Barloworld ordinary shareholders.

Accelerate Property Fund has been granted by the JSE, an extension for the issuing of the circular for the Portside Transaction announced in April 2025 – a category 1 transaction. The circular must be distributed by 15 October 2025.

DealMakers is SA’s quarterly M&A publication.
www.dealmakerssouthafrica.com

Weekly corporate finance activity by SA exchange-listed companies

Marylou Greig
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Weekly corporate finance activity by SA exchange-listed companies

Dipula Properties has launched an equity raise of c.R500 million, implemented through an accelerated bookbuild process. The equity raise will be offered, in the first instance, by way of a vender consideration placing of new ordinary shares and potentially, in the second instance, in terms of its existing general authority to issue shares for cash. The equity raise will fund acquisitions, which include the Protea Gardens Mall in Soweto, announced on 19 August 2025 for R478,1 million.

Following the demerger of Valterra Platinum earlier this year from the Anglo American stable, Anglo retained a 19.9% shareholding subject to an on-market sales lock up period of 90 days. This week Anglo undertook an accelerated bookbuild offering of c.52,2 million Valterra ordinary shares. The shares were placed at a price of R845 per share raising proceeds of R44,1 billion (US$2,5 billion). The disposal represents Anglo’s entire remaining stake in the platinum miner.

Marshall Monteagle is to undertake a renounceable rights offer to raise US$10,7 million (R 191,4 million), the proceeds of which will be used to increase the size of the company’s investment portfolio and to support the growth of its physical trading business without taking on debt. 8,964,377 shares will be issued at a Rights Offer price of $1.20 (R21.34), representing a discount of c.28% as at the date of announcement. The shares will be issued in the ratio of 1 Rights Offer Share for every 4 ordinary shares held. Participating shareholders will be offered an unlisted warrant which is convertible into new Marshall shares at an issue price of $1.20 in the ratio of 1 warrant for every 2 Rights Offer Shares allocated until the exercise period of the warrants expire on 31 October 2030. This will necessitate an increase in authorised capital from 40 million to 100 million. Shareholders will vote on this on 6 October 2025.

Texton Property Fund has exited its exposure to Blackstone Real Estate Income Trust iCapital Offshore Access Fund. The remaining 4,945.4466 shares were redeemed at R110,76 million which compares with the average acquisition price of R98,37 million. The investment yielded a return during the holding period of 31.37%.

In terms of the revised offer to Assura plc shareholders by Primary Health Properties plc (PHP), a further 29,556,535 new PHP shares listed this week. The revised offer remains open for acceptances until 13h00 on 10 September 2025.

In an off-market transaction, Italtile has acquired 675,000 shares held by Italtile Ceramics at a price of R9.91 per share for a total transaction value of R6,69 million.

Salungano, which was suspended in August 2023 for failure to publish its audited financial results for the year ended 31 March 2023, will remain suspended as it has once again pushed out the revised timeline for publication of its FY2024 and FY2025 results. The company, although said to be e progressing on finalising its financial reporting, is unable to pinpoint a date of release.

Sebeta did not release its results for the year ended March 2025 on 29 August 2025 as previously communicated citing a delay in the technical review of the Inzalo Capital transactions. Updates on the timeline would be provided in due course.

Shareholders voted in support of the change in name of Capital Appreciation to Araxi. The share will trade under the new name from 1 October 2025 referenced by the JSE share code AXX.

In a slight name change, Mantengu Mining will drop the reference to mining and trade Mantengu from 10 September 2025.

This week the following companies announced the repurchase of shares:

Schroder European Real Estate Trust plc acquired a further 101,400 shares this week at a price of 65 pence per share for an aggregate £65,863. The shares will be held in Treasury.

South32 continued with its US$200 million repurchase programme announced in August 2024. The shares will be repurchased over the period 12 September 2025 to 11 September 2026. This week 696,357 shares were repurchased for an aggregate cost of A$1,85 million.

On March 6, 2025, Ninety One plc announced that it would undertake a repurchase programme of up to £30 million. The shares will be purchased on the open market and cancelled to reduce the Company’s ordinary share capital. This week the company repurchased a further 347,523 ordinary shares at an average price of 189 pence for an aggregate £654,327.

Investec ltd commenced its share purchase and buy-back programme of up to R2,5 billion (£100 million). Over the period 27 August to 2 September 2025, Investec ltd purchased on the LSE, 1,183,024 Investec plc ordinary share at an average price of £5.4699 per share and 883,589 Investec plc shares on the JSE at an average price of R130.2376 per share. Over the same period Investec ltd repurchased 629,936 of its shares at an average price per share of R127.60. The Investec ltd shares will be cancelled, and the Investec plc shares will be treated as if they were treasury shares in the consolidated annual financial statements of the Investec Group.

The purpose of Bytes Technology’s share repurchase programme, of up to a maximum aggregate consideration of £25 million, is to reduce Bytes’ share capital. This week 525,00 shares were repurchased at an average price per share of £4.03 for an aggregate £2,12 million.

Glencore plc’s current share buy-back programme plans to acquire shares of an aggregate value of up to US$1 billion. The shares will be repurchased on the LSE, BATS, Chi-X and Aquis exchanges and is expected to be completed in February 2026. This week 8,022,682 million shares were repurchased at an average price of £2.94 per share for an aggregate £23,53 million.

In May 2025 Tharisa plc announced it would undertake a repurchase programme of up to US$5 million. Shares have been trading at a significant discount, having been negatively impacted by the global commodity pricing environment, geo-political events and market volatility. Over the period 25 to 29 August 2025, the company repurchased 33,990 shares at an average price of R21.37 on the JSE and 162,500 shares at 91.36 pence per share on the LSE.

In May 2025, British American Tobacco plc extended its share buyback programme by a further £200 million, taking the total amount to be repurchased by 31 December 2025 to £1,1 billion. The extended programme is being funded using the net proceeds of the block trade of shares in ITC to institutional investors. This week the company repurchased a further 606,407 shares at an average price of £41.30 per share for an aggregate £25,04 million.

During the period 25 to 29 August 2025, Prosus repurchased a further 1,341,852 Prosus shares for an aggregate €70,23 million and Naspers, a further 113,829 Naspers shares for a total consideration of R665,81 million.

Four companies issued profit warnings this week: Super Group, Bell Equipment, AfroCentric Investment Corporation and African Rainbow Minerals.

During the week two companies issued or withdrew a cautionary notice: Blu Label Unlimited and Trustco.

DealMakers is SA’s M&A publication.
www.dealmakerssouthafrica.com

Who’s doing what in the African M&A and debt financing space?

Vanessa Aitken
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Who’s doing what in the African M&A and debt financing space?

DealMakers AFRICA

Nigerian agritech platform, Babban Gona, has secured a US$7,5 million debt investment from British International Investment to boost food security and climate resilience for smallholder farmers in Northern Nigeria.

Moroccan e-commerce platform, Justyol, has raised US$1 million in funding and financing, consists of S$400,000 in equity investment from an angel investor and US$600,000 in inventory financing from Turkey’s Danis Group. The cross-border e-commerce platform focuses on connecting Turkish fashion and lifestyle products with target consumers in North Africa, particularly Morocco.

Africa-focused renewable energy refrigeration company Koolboks has closed an US$11 million Series A debt and equity funding round. The round was led by KawiSafi Ventures and Aruwa Capital (who is making a follow-on investment). All On also participated in the equity round with FCMB, FFEM, and bpifrance providing debt funding. The raise was further backed by grants from FFEM/AFD, PREO, Efficiency for Access, and Innovate UK, as well as Results-Based Financing partners including BGFA (Uganda), CEI Africa, and Shell Foundation. Part of the funding will support the setup of the company’s first local assembly plant in Nigeria aimed at job creation and cost reduction for end users.

AgDevCo, a specialist impact investor operating exclusively in the agriculture sector in Africa, has announced a follow-on investment in EFAfrica Group, headquartered in Mauritius, with operations in Tanzania, Kenya and Zambia. EFAfrica is an equipment leasing company focused on small and medium-sized enterprises and farmers in Africa. This latest investment is structured as a long-term loan totalling US$7,2 million, which will allow EFAfrica to offer larger leases to agribusiness corporates and farming services providers.

Egyptian fintech, Munify, has raised a US$3 million seed round led by Y Combinator, with participation from BYLD and Digital Currency Group. Munify is building a cross-border digital bank tailored to Egyptians abroad. Its platform offers instant, low-cost remittances to Egypt, the ability to open U.S. bank accounts, issue debit cards, and tools to hedge against local currency volatility.

Planting Naturals, a producer of sustainable organic palm oil in Sierra Leone has received a US$7 million investment from specialist impact investor, AgDevCo. Planting Naturals operates a vertically integrated model, sourcing fruits from both its own plantations and a growing network of smallholder farmers, to produce organic crude palm oil and palm kernel oil for export.

DealMakers AFRICA is the continent’s quarterly M&A publication
www.dealmakersafrica.com

Revolution in the boardroom: how shareholders are shaping modern business

Lydia Shadrach-Razzino, Carine Pick and Limani Mangoliso
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Revolution in the boardroom: how shareholders are shaping modern business

Boardrooms are no longer insulated sanctuaries where a handful of executives set the course for an entire company. In South Africa and around the globe, shareholders are stepping out of the shadows and demanding a voice – not only in financial outcomes, but in matters of ethics, transparency and governance. The proposed R23bn Barloworld Limited (Barloworld) buy-out has brought this tension into sharp focus. Despite a premium offer and professional guidance, shareholders flexed their power, sending a clear message: trust and good governance cannot be bought. In an era where investors are becoming activists, boards must recognise that meaningful engagement is non-negotiable. The Barloworld saga is not an anomaly, but a warning shot for any boardroom that underestimates the collective clout of its shareholders.

The Barloworld board sought professional advice on handling the buy-out offer by a consortium led by CEO Dominic Sewela, acting through his family trust, and the Saudi-based Zahid Group, which aimed to acquire all the remaining Barloworld shares (except for excluded shareholders) and delist the company from the JSE.

Management buy-outs like this are not uncommon and, often, it is beneficial to align management and acquirer interests for the future growth of a company. However, shareholder consent for the scheme of arrangement for the Barloworld buy-out was not obtained, with over 60% voting against the proposal. This raises the question: what went wrong?

In order to mitigate the conflict between a director’s fiduciary duty to the company and their personal interest in a management buy-out, section 75 of the Companies Act 71 of 2008 provides rules to ensure that directors always act in the company’s best interests. But leading up to the shareholder vote on the buy-out, media reports highlighted conflict of interest concerns regarding Sewela’s involvement in the buy-out, through his family trust’s interest in the consortium, particularly the timing of his disclosure to the board and the decision to allow him to remain as CEO of Barloworld during the buy-out process.

It is clear from the media reports and the unprecedented media release issued on 28 February 2025 by the Public Investment Corporation (PIC) – a shareholder of about 21.97% of the shares in Barloworld – that the shareholders had been significantly dissatisfied with the board prior to the annual general meeting (AGM) held on 21 February 2025.

This dissatisfaction is evident by the results of the AGM, where the re-election of directors and audit committee members was approved by only 56%-57% of the votes, meaning that just under half of the shareholders (42%-43%) rejected the resolutions.

In its media release, the PIC confirmed that it was one of the shareholders who voted against the re-election of board members at the AGM, expressing concerns about corporate governance standards and the steps the board followed in respect of the buy-out.

All these factors paint a picture of a general lack of trust between the shareholders and the board regarding the management of the business leading up to the buy-out vote. The outcome of the AGM was a clear message of no confidence by the shareholders to the board.

The consortium’s offer to the shareholders was made at a premium to the fair value of Barloworld, i.e. an 87% premium, and within the range recommended by the independent valuer, Rothschild. But interestingly, in this case, the gold did not trump.

The truth is that no matter how much professional advice is sought for a buy-out, and regardless of whether the process has been run to the letter of the law, without shareholders’ trust in the board, a company will essentially experience an adaptive failure in its operations. In today’s world, shareholders are looking for more than just monetary compensation from their investments. They have power, and intend to use it to demand transparency, address conflicts of interest, and hold management to account. This is exactly what 63% of Barloworld’s shareholders did. They said no to a R23bn deal.

The ability to exert influence on the strategy and governance of a board and challenge management decisions is termed shareholder activism. This movement is particularly potent in instances of misalignment between the management team and the shareholders.

Shareholder activism is not a new concept in South Africa, but local companies are still coming to terms with its growing influence and the full impact of such activism. Shareholder activism in South Africa started as early as the mid-80s, when General Motors and over 200 public companies were pressured by investors to withdraw from South Africa as a result of the unjust apartheid regime, a move that contributed to its fall. The decision of the General Motors shareholders illustrates how influential shareholder activism can be, especially when collaborative. More recently, minority shareholders at Sasol Limited, holding as little as 5% of the shares, took over the AGM in protest of the company’s climate stance, resulting in the cancellation of the meeting.

Shareholder activism typically arises when issues related to corporate governance, board independence, remuneration, business performance, trust and diversity are at stake. Shareholder activists can be individuals, institutional investors, or non-profit organisations, and they generally champion two main causes: economic issues and governance.

Economic activists focus on enhancing shareholder returns and improving financial performance. Governance activists, on the other hand, are more concerned with the company’s reputation and its societal impact. They seek to enforce changes in corporate governance practices, and drive initiatives related to inclusion, diversity, equity, and environmental, social and governance standards.

Shareholder activists often employ both legal and extra-judicial tactics to pursue their causes. These tactics are robust, dynamic, often public, and sometimes even hostile. South African legislation plays a fundamental role in supporting shareholder activism, as it encourages and promotes accountability and transparency. For instance, some of the legal tactics used by activists are found in the Companies Act. Section 61(3) empowers shareholders holding as little as 10% of the company’s shares to requisition a shareholders’ meeting. Section 65(3) allows any two shareholders to propose a resolution on matters where they are entitled to exercise voting rights. Additionally, following the enactment of certain provisions of the Companies Amendment Bills, section 26 of the Companies Act allows any person to request access to the company’s records, including its memorandum of incorporation, annual financial statements and securities register.

Other South African legislation also supports shareholder activism. The Promotion of Access to Information Act 2 of 2000 allows individuals to access information held by the state and private bodies when required for the exercise or protection of any rights. The Listing Requirements regulate the fair and equal treatment of shareholders, access to information, voting thresholds for certain corporate actions, pre-emptive rights, and related-party transactions. Both the Companies Act and the King IV Report on Corporate Governance for South Africa 2016 advocate for and enable shareholder activism, providing a platform from which activists derive their powers.

Shareholder activism often emerges when shareholders feel ignored or aggrieved by board decisions, especially where transparency and trust are lacking, and social media is now an important tool for activists to mobilise support and shape public opinion. Open communication and transparency are essential for boards to understand and address shareholder concerns. Without this, shareholder action can stall or derail corporate plans.

In the context of the Barloworld buy-out, the decision to pursue the vote on 26 February 2025 was hasty. Through their vote, two large shareholders had expressed dissatisfaction with the board at the AGM, making it suboptimal to hold the buy-out vote just five days later. In fact, when the board was queried by shareholders on the buy-out at the AGM, it was reported that the board responded with “not appropriate”. There were clearly grievances with the board that needed to be addressed with the shareholders prior to the vote. While some may view the rejection of the buy-out as surprising, proper engagement with the shareholders might have led to a different outcome.

With the buy-out offer rejected, the standby offer remains open. It appears that the Barloworld board has now decided to listen and engage with their shareholders, starting with the PIC, which has now committed to backing the standby offer. The latest commitment pushes the total support for the standby offer to 46.93% of Barloworld’s ordinary shares, excluding treasury stock. This figure includes commitments from other shareholders, as well as holdings by the consortium and the Barloworld Foundation.

So, what does it mean to listen and engage with shareholders? In the PIC media release of 28 February 2025, the PIC expressed support for the employment of previously disadvantaged groups in South Africa and emphasised their preference for transactions that are inclusive and broad-based. They highlighted that the benefits of empowerment in any transaction should extend to a wide range of stakeholders. Recognising these concerns, it is understood that the consortium engaged with the PIC and other shareholders to address their issues. This engagement led to the announcement on 23 April 2025 that the consortium had agreed to implement a broad-based black economic empowerment (BEE) transaction as part of the proposed takeover and delisting of Barloworld. This 13.5% BEE deal, which will be rolled out after Barloworld is removed from the JSE and A2X, aims to address the PIC’s broader public interest concerns tied to the R23bn offer.

So, there it is: shareholder activism in all its glory. It is undeniably a powerful and transformative tool. Companies must recognise that in today’s world, shareholders are not just passive investors; they are active and engaged, demanding more than just financial returns. The Barloworld case highlights the significant power that shareholders wield to hold the board accountable, insisting on transparency and meaningful engagement. Let this be a lesson for future corporate transactions – never underestimate the influence of shareholders, especially when backed by legislation that promotes and fosters shareholder activism. In South Africa, shareholder activism resonates deeply due to our historical context, and it will continue to be, in many instances, more rewarding than cash for some shareholders.

Lydia Shadrach-Razzino is a Partner, Carine Pick a Director Designate and Limani Mangoliso a Candidate Attorney in M&A | Baker McKenzie (Johannesburg)

This article first appeared in DealMakers, SA’s quarterly M&A publication.

DealMakers is SA’s M&A publication.
www.dealmakerssouthafrica.com

Leveraging M&A for strategic growth

Thandiwe Nhlapho
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Leveraging M&A for strategic growth

Unlocking synergies and seizing opportunities

Companies often face the choice of deciding to grow organically or through mergers and acquisitions (M&A). Although organic growth typically involves less risk, it takes longer; while growing by acquiring or merging businesses enables targeted and faster growth, but entails risk. While different approaches can be utilised for growth, this article focuses on M&A as part of a growth strategy.

M&A can be a powerful strategy for business growth, particularly for a company aiming to gain access to new customers, expand its geographic markets and/or advance its competitive edge. For instance, an acquirer may be looking to obtain a new product line, add more facilities, or gain expertise and intellectual property as part of its growth.

The example of Disney, through its acquisition of leading production companies like Pixar, Marvel, Lucasfilm and 20th Century Fox, over time, shows that a well-planned and executed M&A strategy can be highly effective in yielding business growth. Notable African examples include MTN Group, which has grown significantly through strategic acquisitions and mergers across Africa and the Middle East, and Shoprite, which has expanded its footprint across Africa through both organic growth and strategic acquisitions, becoming one of the largest grocery retailers on the continent.

A company embarking on M&A must be intentional and prepared, as bringing two businesses together – from conceptualisation and pre-deal engagements to valuation, execution and post-merger integration – is an enormous endeavour. Therefore, several factors, including those discussed below, must be considered for a successful acquisition or merger as a growth strategy.

During the pre-deal due diligence phase, it is crucial for the deal team to comprehend where synergies and integration opportunities exist within the businesses. Furthermore, the related complexities, timelines and costs to implement the transaction need to be understood to enable the business to make informed decisions during the deal approval process.

Leveraging synergies

Synergies are of the utmost importance when utilising M&A to generate growth. M&A, if initiated as part of a planned growth strategy, can result in synergies that offer value creation for both parties. From a cost-cutting perspective, parties could take advantage of overlapping operations or resources by consolidating them. But beyond this, effective strategic synergies can alter the competitive balance of power and create opportunities to change market dynamics in a company’s favour.

Companies can take advantage of revenue synergies, such as cross-selling products or services. In addition, when the products or services of the two companies complement each other, the merged entity can offer more comprehensive solutions to its customers. This was seen in Microsoft’s acquisition of LinkedIn, where the latter’s professional network complemented Microsoft’s suite of productivity tools. A notable African example includes Access Bank’s Acquisition of Diamond Bank in Nigeria, which combined Access Bank’s corporate banking strengths with Diamond Bank’s retail and digital banking capabilities. This acquisition enabled cross-selling of products to a broader, more diverse customer base, and accelerated digital adoption.

Beyond financial metrics, it must be considered how the acquisition aligns with the acquirer’s long-term growth strategy. When performing a valuation of the target, the acquirer needs to factor in synergies without overestimating their impact, while taking into account potential risks. Synergy projections should be based on a detailed understanding of both businesses’ operations. For instance, can the acquirer eliminate redundant functions without impacting service quality? Is there a real opportunity to cross-sell, or are the markets too different?

Opportunities for growth by filling in gaps

When the marketplace changes in response to external factors or regulatory development, it can create a gap in a company’s critical offerings. It may then be a prime opportunity for a company to engage in M&A to address such gaps and remain competitive in the market. For instance:

  • a telecommunications provider might acquire a regional operator with a spectrum licence to fast-track its 5G rollout in key urban hubs;
  • a company may react to shifts in consumer preferences. By way of example, an FMCG company may acquire a plant-based food manufacturer in response to an increasing demand for vegan products, while also benefiting from a lower carbon footprint compared to traditional meat-based offerings;
  • new environmental regulations may require companies to adopt greener technologies. A company could address this by acquiring a business that owns the necessary technology, to enable it to be compliant; and
  • changes in trade policies, such as tariffs or import restrictions, can necessitate strategic acquisitions to localise production.

Go big or go home?

On the contrary, smaller deals are often the sweet spot. It is not always a choice between going big or going home; in fact, smaller deals often have a higher likelihood of success due to several key factors. These deals often succeed because they are strategically focused, involve clear synergies, and are easier to integrate. They might also have reduced financial risk. The financial commitment in smaller deals is generally lower, reducing the overall financial risk for the acquiring company. As part of its growth strategy, a company may engage in small, strategic acquisitions to acquire innovative startups, enhancing its product offerings and remaining competitive without the risk and complexity of larger deals. However, even small-scale transactions are not a “slam dunk” and may involve risk.

The downside

While M&A may bring significant benefit, it comes with inherent risks and requires careful planning and execution to maximise the chance of success. Despite a solid M&A strategy, many deals fail in their implementation.

History shows that M&A deals can destroy value, instead of creating it. Daimler-Benz’s acquisition of Chrysler was intended to create a transatlantic automotive powerhouse. However, the deal suffered from cultural differences and strategic disagreements, leading to significant financial losses. Daimler eventually sold Chrysler at a substantial loss. Cultural integration must be prioritised to prevent disruptions and maintain operational efficiency. Different corporate cultures can create friction that impedes integration. When looking at potential M&A targets, it is important to assess a company’s strategy, values, leadership style and decision-making processes.

Companies pursuing growth through M&A in Africa must also take into account a range of broader strategic and operational considerations beyond the transaction itself. A key consideration is the regulatory and political environment of the target jurisdictions. Africa is not a homogenous market. Each country presents unique legal, compliance and governance frameworks that can materially impact deal feasibility and execution timelines. Regulatory approvals, foreign ownership restrictions, local content requirements and competition laws must all be navigated carefully.

In addition, macroeconomic factors such as currency volatility, inflation and fluctuating interest rates introduce further complexity into deal structuring and valuation. These dynamics can affect not only the purchase price, but also the ongoing financial performance of the combined entity post-acquisition. As such, acquirers should consider incorporating robust hedging strategies, and conduct comprehensive sensitivity and scenario analyses as part of their financial modelling. Properly anticipating and planning for these variables is critical to achieving sustainable value creation from cross-border M&A on the continent.
A thorough due diligence investigation is paramount to ensure the envisaged growth is sustainable. It can also inform the valuation of the target. Furthermore, developing a post-merger integration plan with actionable steps and clear timelines is crucial.

Conclusion

Each company and each deal are different, whether large or small. The use of corporate advisers familiar with the African M&A landscape is essential to tailor the advice to an individual situation because, when executed correctly, there is little that can beat M&A for long-term growth and value creation.

Thandiwe Nhlapho is a Corporate Financier | PSG Capital

This article first appeared in DealMakers AFRICA, the continent’s quarterly M&A publication.

DealMakers AFRICA is a quarterly M&A publication
www.dealmakersafrica.com

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