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GHOST WRAP – Earnings season brings out the bulls and the bears

The Finance Ghost
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GHOST WRAP – Earnings season brings out the bulls and the bears

With the August / September earnings season behind us, it’s helpful to look at share price moves over the past 30 days on the JSE to see how sentiment has shifted.

The winner over this period is clear: PGMs. The winds of change aren’t just blowing in that space, they are positively gusting! There have been other positive standout performances, like Caxton and CTP Publishers and Printers, as well as Purple Group.

On the negative side, a couple of insurance names have had a tough month (like Discovery and Santam), while Sun International continues to struggle with casino demand. There’s been plenty of volatility in the local market, but these moves were particularly interesting to me.

The Ghost Wrap podcast is proudly brought to you by Forvis Mazars, a leading international audit, tax and advisory firm with a national footprint within South Africa. Visit the Forvis Mazars website for more information.

Remember, nothing you hear on this podcast is investment advice, nor does it reflect the views of Forvis Mazars in South Africa. Always speak to your financial advisor.

Listen to the podcast here:

Transcript:

With the wild earnings season in September behind us, it’s good to look at the market and see where the ducks have been quacking. The Top 40 is up 8.4% over 30 days, an extremely strong run that you definitely shouldn’t just annualise and extrapolate, or we would all be very wealthy. Having said that, the year-to-date increase is 36%, which means that the JSE has put in an exceptional performance this year. These are returns on ETFs, so this is an investable return, not just what the index has done!

There’s one sector that has provided more ducks than anywhere else: mining. The Resources index is up almost 20% in the past month. Again, you can buy the index via ETFs by the way, which means you can have it in your tax-free savings account. Or, you can do some stock picking, with names like Sibanye Stillwater, Northam Platinum, Impala Platinum and Valterra Platinum all featuring strongly. The winds of change are blowing in PGMs at last. This also means that poor Anglo American has kept its unenviable reputation for unbundling companies that go on to rally strongly. Perhaps it’s time to separately list De Beers and unbundle it, as that might be the last hope for mined diamonds!

Jokes aside, there have been some notable moves among mid-caps on the JSE as well. The market responded positively to STADIO’s strong results, but that was nothing compared to the rally enjoyed by Caxton and CTP Publishers and Printers in recent weeks:

Caxton released results in mid-September that reflected 12% growth in normalised HEPS and 16.7% growth in the dividend. They managed this with revenue growth of less than 1%, so this was a story of incredible efficiencies with operating costs up by just 0.1%. It’s rare to see operating leverage coming through for a company with such a tepid growth rate!

The share price is up 17.5% in the past month, a good example of a typical value play, which means a really cheap stock (in terms of the valuation multiple) that is doing better than the market expected. This isn’t to say that things are easy at Caxton, or even that they are going particularly well overall. The company finds itself on a difficult growth treadmill, so this is a particularly commendable performance that was enough to get value investors excited. It’s all about finding stocks with low expectations that then do better than the market thinks they will.

I don’t have a position in Caxton unfortunately, but I do have one in Purple Group. It seems like a rather appropriate thing to check my return on the EasyEquities app, which is of course the key business inside Purple. The price is up 38% in the past month, which means I’m now sitting on a 122% increase in my position. Lovely!

Being patient on this one definitely paid off as I waited for the valuation to come back down to earth. Along with the excellent strides they’ve made in the business and particularly the extent of annuitised income vs. reliance on brokerage fees, Purple eventually got to a point where I was ready to jump in. I’m glad I did!

Why the jump in the past month? It’s certainly not been driven by news, with Purple’s last SENS announcement being in April this year. Based on the absolute cracker of an interim period that they had in the six months to February 2025, I wouldn’t be surprised if we see a trading statement in coming weeks dealing with the full year to September 2025. The market isn’t blind to this either, with EasyEquities rallying at a time when the broader market is rocketing in value as well.

I’m in this one for the long haul, as it feels like a company that has plenty of growth runway.

And as always, the market has winners and losers. Among the companies that had a far less inspiring start to spring, we find some financial services names featuring prominently, like Discovery down 9.6% and Santam down 8.9%.

Santam released results right at the beginning of September and the numbers were actually really good, with a big jump in net underwriting margin from 6.5% to 11.3%. The interim dividend was up 10.3%. Discovery also released an update in September and their earnings were excellent, with HEPS up 30% for the year to June. So, why the bearishness in the market?

I’ve heard theories around a cooling off of growth in certain products and a concern around the sustainability of the current margins. But even then, it’s pretty weird that Santam has suffered such a negative move, with a year-to-date return of -2.9% vs. Discovery up 4% and OUTsurance up 12%. For traders looking for interesting volatility in the local market and perhaps some pairs trading opportunities, that sector is dishing up some pretty big short-term moves.

Here’s another one that really caught my eye: Sun International, down 8.5% in the past month. The casinos are struggling, with income headed in the wrong direction. The Resorts and Hotels part of the group isn’t exactly a rocketship either, but at least it was in the green. Still, this is a company that reported dividend growth of 6.8%, yet the share price took a knock even after you adjust for the dividend that was paid in September.

Yes, there are some adjustments that would typically be made for stocks trading ex-dividend after results, but those adjustments don’t fully explain these recent moves. We’ve seen some major shifts in sentiment, which is a timely reminder that markets are always forward looking. That’s certainly the only good explanation for the recent rally in PGMs, as they released mostly crummy results in their recent financial periods.

What will the end of the year hold and can the Top 40 continue its march to the top-right-hand corner of the page, with the South African market showing a spectacular performance thus far this year? Heading into the final quarter of 2025, there’s all to play for.

Ghost Bites (Old Mutual | Orion Minerals | Tharisa)

The Finance Ghost
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Ghost Bites (Old Mutual | Orion Minerals | Tharisa)

Old Mutual will repurchase up to R3 billion in shares (JSE: OMU)

For context, the market cap is over R61 billion

A quieter day of news gave me the opportunity to dedicate space to digging into share repurchases and why listed companies do them. Old Mutual is the latest example, but by no means the only example or even the best example.

The “why’ of repurchases goes like this: if a company believes that its shares are undervalued in the market, then it makes sense to buy those shares back with excess capital rather than pay special cash dividends to shareholders (or worse, feel compelled to do sub-par projects / acquisitions). This boosts HEPS growth over time, as the number of shares in issue reduces each year.

That’s the theory, at least. In practice, we regularly see situations where companies repurchase their shares even when they aren’t undervalued. Companies in the American market (particularly in tech) are by far the worst, using share buybacks to offset the dilutionary impact of share-based compensation to staff. As the icing on the cake, they then disclose adjusted EBITDA that ignores the expense of share-based compensation, even though there’s a cash outflow from the company to repurchase enough shares in the market to offset the issuances. Be thankful for the use of IFRS accounting in South Africa and especially our local concept of HEPS, as it removes much of the scope for nonsense in corporate reporting teams.

Onwards to the mechanics of how this actually works. Most companies ask shareholders at the AGM for authority to repurchase shares, with Old Mutual having been granted a mandate to repurchase up to 10% of shares in issue (this is normal). The words “up to” are critical here, as it gives the company flexibility. Old Mutual received the authority back in May and is finally getting on with it, kicking off a share repurchase programme of up to R3 billion. This is just under 5% of the current market cap, or approximately half of the authority granted at the AGM.

The way this works is that the company appoints brokers (usually large banks) to sit on the bid and buy shares in the market, with the goal being to avoid doing it in such a way that it artificially pushes the price higher and makes the repurchase less attractive for the company. This is why on-market share repurchases are mainly viable for companies with significant liquidity in the stock. Companies with tightly held share registers are more likely to make specific repurchases in negotiated transactions with shareholders. There are far more regulatory requirements for specific repurchases, as you might imagine.

Old Mutual’s share price is flat over 12 months and is trading on a dividend yield of 6.8%, so it’s probably a good candidate for share buybacks. This isn’t exactly a demanding valuation.

Orion Minerals has increased the size of its capital raise once more (JSE: ORN)

Sentiment has swung sharply in their favour recently

For junior mining companies, access to capital is the difference between life and death. Projects require substantial investment to develop them from dreams in the ground to commodity producing assets. Sentiment can also shift quickly in this space, as it takes just one or two major milestones for a company to go from basket case to junior mining darling – and vice versa.

Orion Minerals was in serious danger of slipping into the “too hard” bucket for the market, which is a dark place that few companies emerge from. After a change of management and a subsequent funding deal with Glencore (JSE: GLN), Orion suddenly finds itself in a position where they’ve upsized their current equity capital raising activities for the second time!

Having originally planned to raise R57 million, they increased it to R89 million based on market demand and now they’ve upped it further to R99 million.

This is the share price chart for the past year and it’s quite a thing, with important further context being that the current capital raise is at a price of 17 cents per share (i.e. below where it is currently trading):

Tharisa to transition the Tharisa Mine to underground mining (JSE: THA)

The increase in life of mine doesn’t come cheap of course

Tharisa has announced that they will transition the Tharisa Mine from a large-scale open pit mine to underground mining. The current life of mine shows that open pit operations will be depleted by FY35, so they need to take action to ensure that the mine has a future beyond that date.

They expect total capital expenditure for this project of $547 million, with a peak funding requirement of $173 million. The project internal rate of return (IRR) according to the accompanying presentation is more than 25%.

The investment is spread out over several years, with Tharisa noting that they will need to use internal cash and external funding lines. At the very least this suggests the use of debt, which is no surprise. There’s no indication at the moment that they would need to raise any additional equity capital.

One of the hardest things about mining comes through in this announcement: the company needs to plan a decade ahead, despite great uncertainty over how commodity prices will move.

Nibbles:

  • Director dealings:
    • A number of directors of Truworths (JSE: TRU) sold shares worth R11.3 million to “rebalance their investment portfolios” – if I worked at Truworths, I would also sell every single one of my shares to rebalance away from that business.
    • A director of Thungela (JSE: TGA) sold shares worth R6.5 million.
    • A director of Sabvest (JSE: SBP) bought shares worth R587k.
  • Not exactly director dealings in the traditional sense, but a good reminder of the sheer size of the balance sheets of the likes of Christo Wiese: Titan Fincap has bought shares in Shoprite (JSE: SHP) worth R1.05 billion to settle scrip loans. The same Titan entity also entered into a total return swap for the same value.
  • Labat Africa (JSE: LAB) has new auditors in place and is finalising the financials for the year ended May 2025. They are planning to release them by 15 October.
  • Globe Trade Centre (JSE: GTC) only has trade in its name, not in its listed shares on the JSE. Still, the company has given us an interesting data point for debt pricing, with senior secured notes due October 2030 priced at a meaty 6.5%. This is by no means investment grade debt, but it shows you how much funding pressure there is for lower quality European companies with speculative credit ratings. Globe Trade Centre has recently suffered credit downgrades by rating agencies.

The money of colour

Dominique Olivier
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The money of colour

Pantene, or panettone? When the name of your business makes people think of shampoo brands and Italian fruit cakes, you need to work hard to carve out a space for yourself in the consumer consciousness. Fortunately, a little Y2K panic helped Pantone do exactly that. 

When the clock struck midnight on New Year’s Eve in 1999, the world braced for catastrophe. Y2K, also known as the millennium bug, had been on everyone’s mind for months. Since many year dates on computer systems were stored using only two digits (like “98” for 1998), there was fear that the dawning of the year 2000 would cause the computer systems that controlled everything from banking to flights to misinterpret “00” and cause a critical error.

Planes were predicted to fall out of the sky, computers were supposed to implode, and ATMs were expected to become unusable. Caught up in the panic, many people worldwide withdrew as much cash as they could and stocked up on canned goods, toilet paper and water like the apocalypse was coming. It was a tense time to be alive.

At Pantone’s New Jersey office, a group of executives sat around a table and tried to answer a question that would go on to change the outcome of their company. That question was: if there was one colour that could calm the whole world at once, what would it be?

Back to where it started

The Pantone story starts in the 1950s, with a modest little printing business named M & J Levine Advertising, run by two brothers. In 1956, the brothers hired a young Hofstra University graduate named Lawrence Herbert. He was hired for his chemistry degree, but it was his unexpected obsession with tidiness that created real value. Herbert was dismayed by the chaos that ruled the shop’s ink stocks. Colours were messy, inconsistent, and difficult to reproduce. He set to work creating order and streamlining the colour mixing process, and quickly turned the company’s ink division profitable. In 1962 – just 6 years after starting his job – he bought the company’s technological assets for $50,000 and gave them a catchy new name: Pantone.

From there, Herbert set his order-craving sights on the world. He created the Pantone Matching System (also called PMS) to fulfil his vision of a universal colour dictionary. Herbert’s categorisation of colours would allow designers and manufacturers to ensure consistency, whether they were printing a logo in Tokyo, dyeing cotton in Milan, or molding plastic in Detroit.

But wait – why did we need a dictionary of colour?

Before PMS, colour was completely subjective. A colour described as “sunset orange” in one factory could look like “muddy terracotta” in another. For brands, that was disastrous. Just imagine Coca-Cola’s red appearing as cherry pink on cans printed in the US and maroon on cans printed in the East. Pantone’s guides, which take the form of compact “fan decks” of swatches, solved that problem. The idea behind the PMS is to allow designers to colour match specific colours when a design enters production stage, regardless of the equipment used to produce the colour. Today, this system has been widely adopted by graphic designers and reproduction and printing houses.

By 2019, the catalogue had ballooned to over 2,100 colours. Brands got behind this idea in a big way, and soon, many approached Pantone to create signature “trademarked” colours for them. Just how trademarkable a colour really is somewhat of a murky question (and one that Pantone has skated around for years), but that hasn’t stopped the business from creating the signature blue for Tiffany’s (Pantone 1837), a golden yellow for McDonalds (Pantone 123c), deep purple for Cadbury’s (Pantone 2685c) and of course, a vivid pink for Barbie herself (Pantone 219c).

Enter Ms Eiseman

Herbert may have been a whizz at the science of colour, but he felt that he lacked the understanding of the psychology of colour that his clients – which soon included some of the biggest brands in the world – required. 

In 1983, Leatrice Eiseman published her first book, Alive with Color, which was a mix of colour psychology, theory, and her own personal passion. Eiseman had been raised by a mother who was both an artist and an interior decorator, and grew up surrounded by colour; her understanding of the link between emotion and colour was therefore practically instinctive. The book caught Herbert’s eye, and he promptly phoned Eiseman and offered her a job at Pantone. 

Eiseman was appointed as a colour consultant but quickly moved into the role of executive director for the Pantone Color Institute – a role she has held for 37 years. Eiseman’s magic touch came in the form of giving the colours names in addition to their numbers. Instead of Pantone 17-1463, designers could now refer to Tangerine Tango. She gave us Marsala (Pantone 19-1557) and Radiant Orchid (Pantone 18-3224). These names weren’t accidental – they were little emotional hooks, pulling buyers and designers into the narrative. With Eiseman’s input, Pantone transformed from simply cataloguing colours to shaping the desire to use them.

The birth of “Colour of the Year”

This brings me back to where I started this article – at the anxious turn of the millennium. One of the people seated at that table I described, wondering if a single colour had the power to calm the entire world, was Leatrice Eiseman. 

She chose a pretty, optimistic shade of cerulean blue which reminded her of a clear sky. The Pantone team ran with it and announced Pantone 15-4020, or Cerulean Blue, as their first ever Colour of the Year. For Eiseman, cerulean wasn’t just paint on a swatch; it was hope, bottled and sold in a pigment code. The announcement soon caught fire. Newspapers ran with it, designers referenced it, and consumers latched on.

The millennium experiment proved such a runaway success that Pantone turned it into an annual tradition. These days, a big part of Eiseman’s job involves a kind of global treasure hunt, travelling the world to meet a network of elite “colour whisperers”: designers, trend forecasters, and cultural sleuths who have an uncanny sense of what the world will crave next.

Forecasting the future of colour, it turns out, is part science, part sociology, and part detective work. The Pantone team dissects everything from fashion week runways to museum exhibitions, film studios’ animation palettes, upcoming sporting events, and even viral TikTok aesthetics, tracing the shifting hues of global mood and desire, one colour trend at a time.

Sometimes, Eiseman and her trendy team nail it. Sometimes they spark outrage – like in 2019, when they announced the shade Living Coral (Pantone 16-1546) in a year that saw massive coral deaths across the Great Barrier Reef. Oops. Either way, they got attention. The genius of Colour of the Year is not the prediction itself, but in the positioning. Pantone has moved from being a niche brand to a global influencer. Designers, artists, advertisers, even tech companies began shaping products around the annual pick. In the span of 25 years, a once-obscure printer’s tool became the arbiter of global taste.

Beyond the swatch

If you want real evidence that the Pantone brand has become a household name, you only have to look at the success of Pantone Lifestyle, which was launched to capitalise on the brand’s cultural cachet. Imagine swatch-inspired umbrellas, chairs, notebooks, even flasks. The company has found a way to monetise the very thing it used to sell B2B: colour as an object of desire.

It’s a neat trick, if you think about it. Pantone doesn’t make the paint, fabric, or plastic itself. It sells the language of colour in the form of the system, and then it sells the story of colour back to us through lifestyle products and cultural moments.

Whether the world at large feels that Pantone gets its pick right or not, the fact remains that colour provokes. It reflects what’s happening socially, politically, and environmentally, even when Pantone misjudges the mood. The backlash, in its own way, reinforces Pantone’s central role in global discourse

The business of forecasting

Today, Pantone competes in a booming industry of trend forecasting. Alongside firms like WGSN, it publishes reports predicting which colours will dominate retail two, three, or four years in advance. 

It’s a high-stakes game. Entire product lines – from Zara’s seasonal collections to Apple’s iPhone case options – may be shaped by these predictions. Get it right, and Pantone steers billions in consumer spending. Get it wrong, and you might end up with a warehouse full of coral-coloured sofas nobody wants.

On the surface, Pantone’s story is about swatches and pigments. But underneath, it’s about control – control of perception, of branding, and even of cultural mood. Pantone turned something ephemeral into something measurable. And in doing so, it built an empire.

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 Ep110 | US priced for perfection

Investec No Ordinary Wednesday
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PODCAST: No Ordinary Wednesday Ep110 | US priced for perfection

Listen to the podcast here:

The US market is trading ~40% above fair value. What could cause those lofty valuations to deflate? This week on No Ordinary Wednesday, Chris Holdsworth, Chief Investment Strategist at Investec Wealth & Investment International, unpacks the key findings of Investec’s latest Global Investment View, highlighting risks for global investors and where opportunities lie outside the US.

This includes Europe loosening fiscal policy to support growth, China rolling out stimulus, with commodities rallying in response, and South African equities remaining cheap with commodities and improving SOEs providing tailwinds. 

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.

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Also on Apple Podcasts, Spotify and YouTube:

Ghost Bites (Africa Bitcoin Corporation | Curro | eMedia | Orion Minerals | Prosus | Trustco)

The Finance Ghost
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Ghost Bites (Africa Bitcoin Corporation | Curro | eMedia | Orion Minerals | Prosus | Trustco)

Africa Bitcoin Corporation and core investment Altvest Credit Opportunities Fund released numbers (JSE: BAC | JSE: BACC)

At least they have fresh numbers for the capital raise

Africa Bitcoin Corporation, previously Altvest, has been busy with a lot of things lately. Still, it’s disappointing that the trading statement for the six months to August 2025 came out on the same day as results were released. I’ll say it again: trading statements are meant to be early warning systems. I’m somewhat more forgiving of smaller companies, particularly when they’ve been snowed under with corporate actions, but it’s still not good enough.

We can skip the starter and go straight to the main course, as we have detailed results to work with rather than the trading statement. The company has thrown absolutely everything behind the bitcoin branding at group level and you’ll see that everywhere in the reporting. Gone is the Altvest style of branding that so much effort (and money) was put into. Personally, I think they should’ve just introduced a new class of shares for the bitcoin endeavours, as the entire structure was perfectly set up for that approach.

If you read the executive chairman commentary, you’ll see that the group is focused on two things: (1) building the bitcoin holdings over time, and (2) deploying capital to SMEs through the Altvest Credit Opportunities Fund (ACOF). There’s no shortage of ambition, with a dream of growing from the current level to having a top 100 market cap in Africa within 5 years. They plan to raise R3.8 billion over the next 3 years. Aim for the stars, hey.

Back down on earth, there’s a long way to go. You might be forgiven at this point for forgetting about Umganu Lodge (a sideways NAV story) and Bambanani Family Group (which can only dream of a sideways NAV). There’s little reason for investors to pay much attention to the A and B shares that represent these assets respectively, so don’t feel too bad about forgetting.

The C shares are a lot more interesting, as they give access to ACOF. ACOF is still losing money at an alarming rate. Although it is early in its J-curve journey, I was hoping to see a stronger improvement in the unit economics in this period. Profit before impairment and operating expenses (i.e. net of funding costs) increased from R2 million to R9.6 million, but operating expenses jumped from R10.3 million to R16.9 million. I don’t really understand why that would be necessary at this point. This means that the net loss for the period before tax was R14.6 million vs. R17.2 million in the comparable period. With ACOF looking to raise equity capital, they really needed to show a better rate of improvement in the underlying economics. Just how viable is it to lend at SMEs at such competitive rates?

Despite such a modest decrease in the loss, the valuation of ACOF has jumped from R163 million to R253 million. You can decide for yourself if that sounds reasonable.

Although Africa Bitcoin Corporation reported a profit at group level, this is thanks to the fair value gains on investments. In other words, you have to be comfortable with the incredibly spicy uptick in value in ACOF to feel good about this performance:

I’ve always appreciated the very constructive and candid approach that the top management at the company have taken in their engagements with me. But my concerns remain high and my money remains uninvolved in this story. The main thing I was looking for was a sign of vastly improved unit economics in ACOF. Perhaps it will come in the next period.

Curro has released the deal circular and expects to delist by December (JSE: COH)

This is truly a landmark deal in South Africa

The Jannie Mouton Stigting (Foundation) currently holds 3.36% of the shares in Curro. As we know from following Curro in recent years, there are a number of factors that led to an incredibly disappointing outcome for shareholders vs. the high hopes that the market had for the group a decade ago. Recognising the role that Curro plays from a societal perspective, the major players involved decided that Curro would be more suited to being a Public Benefit Organisation (PBO) rather than a for-profit company that is expected to show annual growth.

This is effectively a social enterprise approach, as Curro is certainly capable of washing its own face and doesn’t need handouts. The challenge is that the business model just isn’t appealing enough to investors, which is why the share price has been under so much pressure. This could’ve led to strategies that could be damaging to the core ethos of the business, like a reduction in capital expenditure at the schools.

Despite much of the ill-informed and often malicious commentary I’ve seen on social media, what we have here is an exceptional example of a billionaire (and those running his family legacy) stepping up and doing the right thing. Instead of trying to buy Curro at a cheeky price, the scheme of arrangement is priced at R13 per share, a 53% premium to the 30-day VWAP. It will be paid with a combination of cash and shares in Capitec (JSE: CPI) and PSG Financial Services (JSE: KST) – two of the best companies on the local market. If this trade was about the money, there is no world in which any profit-motivated party would swap Capitec and PSG Financial Services exposure for Curro. It’s like trading your Ferrari for a Fiat.

Incredibly, the fees related to the transaction add up to less than R2 million. This has to be one of the most efficiently priced schemes I’ve ever seen, with the advisors perhaps recognising the broader rationale and stepping up accordingly.

Bravo, Jannie Mouton and everyone involved.

eMedia Holdings is buying 30% in Pristine World Holdings (JSE: EMH | JSE: EMN)

There’s some clear momentum at the company

Someone seems to have lit a fire under their you-know-whats at eMedia Holdings. This company usually has fewer SENS announcements than reruns of Anaconda on eTV, but that changed recently. The Remgro (JSE: REM) deal injected capital into the business and significantly improved the liquidity of the N shares with a wider shareholder base after the unbundling by Remgro. People are suddenly talking about eMedia!

The positive momentum isn’t going to waste, with the company announcing the acquisition of 30% in Pristine World Holdings, an offshore company that focuses on providing visual effects services to the global film and television markets. Combined with further investment by eMedia in its visual effects studios in Hyde Park, the group will provide clients with the opportunity to use virtual advertising and will enhance its current productions.

The 30% stake will change hands for $6.9 million, or roughly R119 million. That’s certainly not a small deal, especially for a significant minority position rather than a controlling stake. The net asset value (NAV) of Pristine is $22.9 million, so they are paying basically paying the NAV. We only have a net profit number for 9 months rather than 12 months, with no indication of seasonality in the business, so all I can do is annualise the 9-month number to arrive at indicative annual net profit of $2.48 million. This puts the deal on a P/E of roughly 9.2x, which feels like a big number for a non-controlling stake.

It’s possible that earnings are weighted towards the final quarter of the year, but then why don’t they say that in the announcement? And if there isn’t any seasonality, then I struggle to understand the pricing of this deal.

Orion Minerals has increased the capital raise (JSE: ORN)

They seem to be enjoying strong demand from institutional investors

Orion Minerals recently announced an all-important funding deal with Glencore (JSE: GLN). This really kicked the company into a higher gear, with the market believing that things are finally happening.

This is of course an excellent backdrop to capital raising activities, with Orion taking full advantage of the demand in the market. They initially planned to raise around R57 million (the number makes more sense in Aussie dollars than in rands) from “sophisticated and professional investors” – i.e. not a retail raise open to the public. The raise is now up to R89 million thanks to the level of demand for the shares, so that’s rather encouraging.

Prosus is ready to Just Eat (JSE: PRX | JSE: NPN)

It’s time for the European strategy to be demonstrated

Prosus announced that the offer for Just Eat Takeaway.com is unconditional. The deal can now be closed, with 90.13% of the shares in Just Eat Takeaway.com committed to the offer. Remaining shareholders can still accept the Prosus offer until 16 October.

This is going to be the first really big test for Prosus CEO Fabricio Bloisi, as this deal has been conceptualised and executed under his watch. The thesis here is that Prosus can unlock growth in the tepid Western European markets using AI, with the recently announced acquisition of La Centrale in France following a similar theme.

I really like the Just Eat Takeaway.com deal, as it feels like Prosus pounced on this thing at the right time and at a decent price. All eyes are on execution now, particularly with the Prosus share price up 65% year-to-date. This is a chart that I’ve been very happy to own!

Trustco is on the wrong side of the JSE yet again (JSE: TTO)

How does this company expect to cope in the American regulatory environment?

Trustco has found itself in the naughty corner yet again, with the JSE imposing a public censure and a fine of R5 million on the company. The regulator doesn’t take this step lightly, so Trustco really managed to irritate them here.

How did this happen? Well, back in 2022, Trustco subsidiaries entered into a transaction with SBSL Investments that gave that company the option to subscribe for shares in Meya Mining. This was a category 1 transaction, which would require a circular and shareholder approval. According to the JSE, Trustco went ahead with implementing the deal across a couple of tranches anyway.

To make it worse, to date there is still no circular! The jokes about the company’s name truly do write themselves.

I must remind you that Trustco already has a poor relationship with the JSE and has made it very clear that they don’t want to be listed here. The grand plan is to be listed in the US instead. If Trustco treats the US regulators with the same disdain as the South African regulators, then they are going to have a very bad time.

Is R5 million enough for a company’s disregard of the rules for a circular? Personally, I don’t think so. The advisory fees alone would usually come to that number. The fine for non-compliance needs to be a lot higher than the cost of compliance, otherwise there isn’t a strong enough deterrent.

Nibbles:

  • Director dealings:
    • I take a somewhat asymmetrical view on director share awards. For example, a director of AVI (JSE: AVI) was awarded shares and sold only the taxable portion, but I don’t really see this as a “buy” because the director didn’t need to put additional cash in. But when a director sells an entire award i.e. not just the taxable portion, it’s a proper “sale” in my books because the director would rather have cash than shares. This was the case for a director of an AVI subsidiary, with a sale to the value of R570k. Director dealings are ultimately only useful for their signalling value to investors, so my approach is based on the typical intent behind the various types of transactions. You may of course have a different view on this!
    • While on this topic, I should mention that I always ignore partnership matching schemes, in which directors get to buy shares in a subsidised manner (like at British American Tobacco – JSE: BTI). I also ignore situations in which multiple directors simply reinvest their dividends in shares, as we often see at Anglo American (JSE: AGL). Again, it’s all about how strong the signal actually is. These are weak buy signals that are more linked to employment and remuneration than a view on where the share price is currently trading.
    • And now we arrive at a director dealing that is actually useful, being the CEO of Santam (JSE: SNT) buying shares worth R317k.
    • Buy signals are by far the most useful form of director dealings, but we should never ignore sales, especially of chunky amounts. A prescribed officer of Standard Bank (JSE: SBK) sold shares worth R3.5 million.
    • Finally, we get to an off-market purchase that is clearly some kind of negotiated transaction rather than anything else. An associate of the non-executive chairman of Burstone (JSE: BTN), Moss Ngoasheng, has agreed to acquire a whopping R499.99 million worth of shares in an off-market deal. Quite why it is just below R500 million, I really don’t know. The price is R9 per share and the current traded price is R8.05.
  • If you’re a shareholder in Supermarket Income REIT (JSE: SRI), you’ll be interested in the fact that the fund has declared a dividend for the July to September period of 1.545 pence per share. There’s no scrip dividend alternative, so all shareholders will be receiving the dividend in cash. The exchange rate for South African shareholders will be announced on 20 October.
  • Telemasters (JSE: TLM) will pay its dividend of 0.2 cents per share (yes, just 0.2 cents per share) on 24 October. Try not to spend it all at once.
  • If you’re keen to catch up on Southern Palladium (JSE: SDL) and the company’s investment thesis, you can check out the presentation they did in Sydney.

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

Old Mutual Private Equity (Old Mutual) is to exit its 2018 investment in Medhold to Sanlam Private Equity (Sanlam). In operation since 1988, Medhold is a leading supplier of medical devices in Southern Africa. Its product range comprises critical healthcare devices including anaesthetic delivery systems, orthopaedics, robotic assisted surgery, minimally invasive surgery, patient monitoring, cardiology, maternal infant care, infection control, surgical workspaces and electro-surgical equipment. Financial details were not disclosed.

As part of its strategy to diversify and strengthen its revenue streams within its existing ecosystem, eMedia has announced the acquisition of a 30% strategic equity stake in Pristine World. Pristine World is beneficially owned by UAE’s Convergence IT Services and is a specialist provider of visual effects services catering to the global film and television and commercial markets. eMedia will pay US$6,92 million (R119,1 million) for the stake which will be funded out of existing cash resources and available facilities.

Remgro via its joint venture Pembani Remgro Infrastructure Fund II has invested US$20 million in Kenyan Internet Service Provider (ISP) Mawingu. The capital injection will be used to scale its long-term expansion strategy which aims to impact one million people across the continent by 2028.

Prosus subsidiary OLX has purchased La Centrale in an all cash €1,1 billon deal from Providence Equity Partners. La Centrale is an online French vehicles classifieds platform, the acquisition of which will accelerate OLX’s European strategy to grow highly profitable marketplaces using best-in-class AI tools trusted by dealers and consumers. The deal marks OLX’s entry into Western Europe, giving it a foothold and an immediate leading position in one of Europe’s largest used car markets.

Finbond Group South Africa, a wholly owned subsidiary of Finbond is to acquire a 74% stake in Benefits Bouquet from Eclipto in a transaction valued at R116,3 million. Benefits Bouquet is a provider of services and benefits to consumers, ranging from discount coupons, credit and debt assistance, legal advisory services, financial assistance to trauma and HIV support. The deal will diversify Findbond’s revenue streams and increase the profitability of its South African operations.

Norfund, the Norwegian Investment Fund for Developing Countries, has acquired a 10% equity stake in Anthem, a newly created utility-scale renewable energy platform by African Infrastructure Investment Managers’ IDEAS Managed Fund (Old Mutual). The US$86 million investment by Norfund is alongside Mahlako Energy Fund, an investment and advisory firm owned 100% by Black South African women. The partnerships will drive the platform’s success to deliver c. 11 GW pipeline under the development of Anthem.

In a voluntary announcement KAL Group has advised of its disposal of Tego Plastics and Agrimark operations for an undisclosed sum. The disposal forms part of the company’s strategy to streamline its operations and focus on other segments of the group. It will however continue to purchase agricultural packaging products from Tego. Financial details were undisclosed.

In a move to head off the closure of ArcelorMittal’s local steel businesses, South Africa’s development finance institution, the Industrial Development Corporation (IDC), is said to be preparing to make a bid for the business. In an article published by News24, the IDC’s c.R8,4 billion bid would end two years of negotiations and pave the way for the entry of other international steel companies as the IDC plans to seek strategic investors to run the plants.

The acquisition by Prosus of Just Eat Takeaway.com (JET) is unconditional with 90.13% of shares tendered or irrevocably committed by the closing of acceptances on 1 October 2025. JET will be delisted from Euronext Amsterdam.

On 1 October 2025, the parties to the Barloworld transaction agreed to waive the Standby Offer Condition relating to the receipt of competition regulatory approval by COMESA. Accordingly, in light of the waiver, all Standby Offer Conditions have been fulfilled or waived and the Standby Offer has become unconditional. Shareholders who still wish to accept the Standby Offer have until Wednesday, 15 October 2025 to do so. Results will be announced on 16 October 2025.

Unlisted Companies

Global leader in digital business and technology services NTT DATA has acquired EXAH a local Salesforce Consulting Partner and AI implementation specialist. The acquisition will deliver an end-to-end Salesforce and AI delivery experience to customers across the Middle East and Africa region. Financial details were undisclosed.

Cape Town-based The PURA Beverage Company which manufactures, distributes, markets and sells “better for you” beverages, has secured a R260 million investment from an undisclosed global investment firm. The capital injection will be used to scale the company’s international footprint and business. The investment will be leveraged to accelerate PURA Soda’s market penetration across major retailers predominantly in the US.

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

Emira Property Fund has acquired a further 130,160,464 SA Corporate Real Estate (SAC) shares on the open market. The shares were acquired for an aggregate consideration of R400,8 million. Together with the SAC shares acquired in June this year, Emira now holds a total of 229,56 million shares equating to an 8.7% stake in the company.

Orion Minerals initially announced a A$5 million (R57 million) capital raising exercise but increased this to A$7,7 million due to level of demand. The private placement comprises the issue of c. 515 million shares at an issue price of 1,5 cents (R0.17) per share – the issue of which falls within Orion’s 15% capacity for issues of equity securities without shareholder approval. A further 66,67 million shares will be issued to Tarney Holdings, subject to shareholder approval in November 2025. The funds raised will be applied to continue early works at the Prieska Copper Zinc Uppers mine and to finalise optimisation studies and ongoing site works at the Okiep Copper Project.

Cilo Cybin, the Cannabis SPAC has transferred its listing from AltX to the General Segment of the JSE Main Board, effective 29 September 2025. The General Segment of the Main Board was launched last year and has seen over 30 companies migrate to this segment, the listing requirements of which are less onerous for the smaller cap firms, providing a flexible, supportive regulatory environment, enabling capital raising measures and significant cost savings.

This week Africa Bitcoin (formerly Altvest Capital) listed on the Namibia Securities Exchange, effective 2 October 2025. The secondary listing coincides with the company’s equity capital raise and allotment of up to 1 million ordinary shares.

Following the successful take private of Assura plc by Primary Health Properties plc, Assura will delist from the LSE on 6 October 2025 and from the JSE on 23 October 2025.

The JSE has advised shareholders that Sebata has failed to publish its annual report for the year ending 31 March 2025 as required by the JSE Listing Requirements and, as a result, the shares in the company have been suspended.

Labat Africa has failed to submit its annual report timeously and consequently trading of its shares on the JSE is under threat of suspension. The company has until 31 October 2024 to rectify the matter.

This week the following companies announced the repurchase of shares:

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 1,083,864 shares were repurchased for an aggregate cost of A$2,94 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 150,000 ordinary shares at an average price 204 pence for an aggregate £305,670.

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 515,775 shares were repurchased at an average price per share of £3.92 for an aggregate £2,02 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 million shares were repurchased at an average price of £3.29 per share for an aggregate £26,3 million.

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 632,298 shares at an average price of £39.29 per share for an aggregate £24,84 million.

During the period 22 to 26 September 2025, Prosus repurchased a further 1,576,035 Prosus shares for an aggregate €90,7 million and Naspers, a further 75,461 Naspers shares for a total consideration of R451,3 million.

One company issued profit warnings this week: Wesizwe Platinum.

During the week one company issued or withdrew a cautionary notice:
Hulamin.

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?

West African private equity firm, Verod, has announced the successful exit from Nigerian pension fund administrator, Tangerine APT Pensions through a disposal to minority partner, APT Securities and Funds. Financial terms of the deal were not disclosed. In 2020, Verod acquired 100% of AXA Mansard Pensions Limited and 45% of APT Pension Fund Managers Limited. In 2021, the two businesses were merged to create Tangerine APT Pensions Limited.

Capital Alliance Private Equity IV announced its full equity exit of a 15.92% stake from Nigerian energy company Aradel Holdings. This transaction follows the successful listing of Aradel on the Nigerian Exchange in October 2024.

Norfund has announced that it is investing €20 million in Société Ivoirienne de Productions Animales (SIPRA), one of the largest locally owned and integrated poultry companies in West Africa. Headquartered in Abidjan, Côte d’Ivoire, SIPRA operates across the entire value chain – from feed production; breeding to processing and distribution with a strong regional presence (+150 outlets) in both Côte d’Ivoire and Burkina Faso.

Oscillate PLC has revised the terms of its acquisition of Kalahari Copper to include Kalahari Copper’s Namibian Copper Project, in addition to the previously announced Botswanan Copper Project. Oscillate made a non-refundable payment of £500,000 to Kalahari Copper, some of which will be allocated to work programmes and license renewals. Upon signing the share purchase agreement, Oscillate will issue shares equating to 30% of its outstanding shares as consideration. A cash payment of £2,0 million, increased from £1,5 million, will be made to the seller within 10 days of relisting on a senior exchange. Milestone payments of £1,5 million each will be due upon an initial Maiden JORC Resource, a Pre-Feasibility Study, and a Final Investment Decision for both the Botswanan and Namibian licenses.

Egyptian fintech, Sabika has a six-figure US$ investment led by M-Empire Angels. Sabika is a digital platform that provides secure, transparent, and Sharia-compliant gold and silver investment services. The investment will be used to enhance platform features, integrate AI-driven tools, and support Sabika’s expansion into the Saudi market in 2025.

Pembani Remgro Infrastructure Fund II has made a US$20 million investment in Kenyan Internet Service Provider (ISP), Mawingu. The investment will be used for Mawingu’s long-term expansion strategy, which aims to impact 1 million people across the continent by 2028 through a combination of acquisitions of local ISPs and the development of digital infrastructure in areas historically left behind due to high capital costs and geographic barriers.

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

Navigating an overly geared capital structure in M&A

Sibongakonke Kheswa
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Navigating an overly geared capital structure in M&A

The hidden tax trap of Section 8E of the income tax act

Capital structure is a critical consideration in M&A transactions. Excessive gearing (where a business is over-reliant on debt) can compromise the target company and/or the combined entity’s financial health, place management under undue pressure, and potentially derail a transaction.

Managing risk associated with an overly geared capital structure
While debt is often more readily available in emerging or underperforming markets – and generally offers a lower cost of capital and no dilution of equity shareholding – it also introduces greater risk. An overreliance on debt can lead to capital structure imbalances, which may pose significant operational and financial challenges, including pressure on financial covenants. To mitigate this, acquirers often explore restructuring mechanisms such as converting debt into equity, issuing quasi-equity instruments, or refinancing existing debt. One commonly used instrument in this context is the preference share. These instruments are attractive due to their hybrid nature, offering features of both debt and equity. However, where such preference shares function more like debt, they may trigger reclassification under section 8E of the Income Tax Act, No. 58 of 1962, as amended, with significant tax consequences.

The section 8E tax trap

Section 8E was introduced to curb tax arbitrage where instruments are structured as shares but, in substance, behave like debt. It expands the definition of an ‘equity instrument’ to include any right or interest whose value is directly or indirectly derived from a share, ensuring that returns on debt-like shares are taxed in line with their economic substance.

Preference shares may fall within the scope of section 8E if one or more of the following criteria is met:
*the preference shares are redeemable within three years (mandatory or optional);

*the preference shares carry a return of capital obligation within that period; or

*they pay dividends linked to interest rates or fixed timelines, rather than ordinary share performance.

Additionally, shares linked to restrictive financial arrangements or whose value is derived from similar instruments may also trigger section 8E.

So, what happens if section 8E applies?

*Any dividends declared on these instruments are treated as income in the hands of the recipient, and are subject to normal income tax rates and not the 20% dividends tax normally applicable to qualifying dividends for individuals (dividends declared to a SA tax resident company are exempt).
*The issuer does not qualify for a tax deduction on the dividend paid.
*The recipient is not entitled to any exemptions typically available for either dividends or interest.

The core principle behind section 8E is to align the tax treatment of preference shares with their underlying economic reality. If an instrument functions like a loan – despite being issued as a share – then its returns are taxed accordingly. This ensures a consistent and equitable tax outcome across similar financial arrangements.

To illustrate the implications, consider the following scenario:
ABC (Pty) Ltd (ABC) issues R1m in redeemable preference shares to XYZ (Pty) Ltd (XYZ). The shares entitle XYZ to a dividend of 70% of the weighted average prime rate of 11.25%, payable quarterly. ABC may require XYZ to redeem the shares for their original subscription value within three years.

Year 1:
*ABC pays XYZ dividends of R78,750 over the course of the year.
Tax treatment:

*XYZ (the recipient): The R78,750 is taxed as income, not a dividend. No exemptions apply.

*ABC (the issuer): No dividends tax is due, and no deduction is available for the dividend payment.

Closing thoughts

Tax considerations in M&A extend far beyond compliance; they are fundamental to value preservation and creation. Where preference shares form part of the funding structure, particularly in a higher interest, post-COVID 19 environment, it is essential in any transaction to evaluate whether their use would fall within the ambit of section 8E.

Misclassification can significantly impact the post-tax return profile and, ultimately, the commercial viability of a transaction. Careful structuring, aligned with both legal form and economic substance, is key. Engaging tax specialists early in the process is not optional – it is a strategic imperative.

Sibongakonke Kheswa is a Corporate Financier | PSG Capital

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

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

Employment contracts in corporate mergers under Cameroonian law

Joelle Zeukeng Azemkeu
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Employment contracts in corporate mergers under Cameroonian law

The inherent dynamism of corporate life can lead companies to undergo transformations during their existence, and these changes inevitably carry significant legal consequences for the organisation and functioning of the company. Specifically, as part of its strategic vision, a company may decide to restructure in order to adapt to possible economic changes, remain competitive,1 and maintain or improve its market position. Among the various forms of restructuring is the merger.

Under OHADA commercial company law, a merger is defined as “the operation by which two or more companies come together to form only one, either by creating a new company or by absorption by one of them.”2 The Uniform Act on Commercial Companies and Economic Interest Groups (AUSCGIE) thus draws a traditional distinction between the creation of a new company by several existing ones (merger by formation of a new company) and the absorption of one company by another (merger-absorption).3

Although distinguished in Article 189 of the aforementioned Uniform Act, both types of mergers are governed by the same legal regime. The principal consequence of such a legal operation is the universal transfer of the assets and liabilities of the absorbed company to the absorbing company.4 As such, both the assets and liabilities of the absorbed company are transferred to the new or absorbing entity. Another legal effect is dissolution without liquidation: the absorbed company disappears in favour of the entity that acquires its assets.

This automatic and universal transfer raises the issue of contracts entered into intuitu personae with the absorbed company, particularly employment contracts that are still in force at the time of the merger. Given the principle of privity of contract set out in Article 1165 of the Cameroonian Civil Code, which states that “agreements produce effects only between the contracting parties and do not prejudice third parties,” one might be tempted to conclude that employment contracts would cease to have effect following a merger, as they were entered into based on the specific qualities, both objective and subjective, of the absorbed company and its employees.

However, Article 42 of the Labour Code provides otherwise:
“Where there is a change in the legal situation of the employer, notably by succession, sale, merger, transfer, transformation of business, or incorporation, all employment contracts in force on the date of such change shall continue between the new employer and the company’s staff”. 5

Termination of such contracts can only occur under the terms and conditions laid out in this section.

(a) The above provisions shall not apply:

  • When there is a change in the company’s activity;
  • When the workers express, before the competent labour inspector, their wish to be dismissed with the payment of their entitlements, prior to the modification.

(b) The cessation of the business, except in cases of force majeure, does not exempt the employer from complying with the provisions of this section. Bankruptcy and judicial liquidation are not considered cases of force majeure.

The employment contract may, while in effect, be modified at the initiative of either party

a) If a substantial modification is proposed by the employer and rejected by the employee, any resulting termination of the contract shall be attributed to the employer. It shall be considered abusive only if the proposed change is not justified by the interests of the company.
b) If a substantial modification is proposed by the employee and rejected by the employer, the contract may only be terminated by a resignation submitted by the employee.”

This article means that in the event of a merger, all employment contracts in force remain valid and are transferred to the new employer. As such, Articles 1165 of the Civil Code and 42 of the Labour Code appear to offer conflicting solutions, raising the question of which provision should prevail under Cameroonian law. The answer lies in a well-established civil law principle: special rules override general ones. Therefore, in accordance with this legal maxim, the fate of employment contracts in the event of a merger is their automatic transfer to the new entity.

This leads to the broader question of whether Cameroonian law effectively protects the parties to the employment contract during mergers. To address this issue, we will evaluate the protection offered both to the employee and the employer. While it is clear that the employee enjoys enhanced protection (1), this comes at the cost of a more limited protection for the employer (2).

1.Enhanced Protection of Employees in Corporate Mergers

Through Article 42 of the Labour Code, the Cameroonian legislator has clearly reaffirmed the principle of freedom of contract, which is central to Cameroonian labour law. As a result, employees are not passive victims of the merger of their employing company. Their employment contracts continue under the new employer, offering protection through continuity. This ensures that employees are not automatically dismissed as a result of these structural changes, and that their employment relationships are simply transferred to the successor employer.

Furthermore, the merger places a legal obligation on the absorbing company to uphold the contract under its previous conditions, thereby shielding employees from sudden professional instability.

Beyond ensuring job security, the legislator also allows workers to opt out of this continuity by requesting their dismissal and the corresponding entitlements.
While these rights significantly protect employees during mergers, they also, however, dilute the protection available to the employer. 6

2.Weakened protection of employers in corporate mergers

In employer-employee relationships, the employer is generally seen as the dominant party. Consequently, in the context of mergers, despite the employer often being the primary beneficiary, their legal protection is weakened.

The employer’s economic activity is sacrificed on the altar of contractual freedom for the employee. The latter can choose whether or not to continue the employment relationship, whereas the employer is legally bound to continue executing contracts. Worse still, the employer must pay severance to any employee who chooses to leave.

It is difficult to anticipate the number of employees who may choose to leave during merger negotiations. Similarly, the employer may be forced to allocate a highly speculative budget for potential departures – an economically burden-some scenario.

A recent example in Cameroon illustrates this reality: Mediterranean Shipping Company reportedly lost 400 employees following the acquisition of Bolloré Africa Logistics’ operations, with the employees invoking Article 42 of the Labour Code. Such a situation inevitably leads to financial turmoil.

  1. Call for a rebalancing of interests in corporate mergers

Given the above, the solution offered by the legislator in Article 42 of the Labour Code is not attractive for investors. In our view, lawmakers should consider introducing a merger indemnity to encourage employees to stay in their positions. 7

Employers should also leverage their creativity to implement incentive measures aimed at persuading employees to maintain their contractual relationship, and thus stabilise company operations. For instance, employers could involve employee representatives in the merger negotiations, to help avoid circumstances that could lead to mass resignations and thereby jeopardise business continuity.

Naturally, the elimination of certain roles, duplication of positions, and disruption to team cohesion can result in social tensions, which must be addressed through appropriate negotiations and measures to mitigate both their impact on employees and the risk of investment loss. Human resources remain a pillar of corporate survival and a guarantee of return on investment for the absorbing company.

Finally, the legislator could consider limiting employees’ rights to unilateral dismissal during mergers, in order to prevent the employer from being unduly penalised through excessive severance costs and organisational chaos, especially when the original goal was to enhance competitiveness.

Joelle Zeukeng Azemkeu is a lawyer at the Cameroon Bar Association and is an ILFA Alumni

  1. R. Sy, Restructuring Operations of Commercial Companies under OHADA Law: The Case of Mergers, published on 26 June 2024, www.village-justice.com, accessed on 1 July 2025;
  2. See Article 189 paragraph 1 of the Uniform Act on Commercial Companies and Economic Interest Groups;
  3. B. Mator, Mergers of Companies under OHADA Law, Ohadata D-04-19;
  4. Ibid.
  5. This solution is identical under the labour laws of Niger, Burkina Faso, Mali and Chad. The Cameroonian and Nigerian versions are identical.
  6. N. Ekome, Implications of Business Transfers on the Execution of Employment Contracts in Progress in Cameroon, www.village-justice.com, published on 11 July 2017, accessed on 2 July 2025;
  7. In February 2023, in Cameroon, 400 employees of Bolloré Transport & Logistics requested to be dismissed under Article 42 of the Labour Code, following the transfer of the company’s African operations to Mediterranean Shipping Company;
    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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