Adcock Ingram released the circular for the Natco Pharma deal (JSE: AIP)
This relates to the scheme of arrangement at R75 per share
Natco Pharma is an Indian pharmaceutical manufacturer that has been around since 1981. They’ve built a seriously impressive footprint across over 50 countries, including developed and emerging markets. And now, they would very much like to own more shares in Adcock Ingram.
Note, I said more rather than all of the shares, as Bidvest (JSE: BVT) is coming along for the ride on this one and sticking around as the controlling shareholder. They are acting in concert with Natco Pharma on this deal. When all is said and done, the expectation is that Bidvest will hold 64.25% and Natco Pharma will have 35.75%.
The scheme price of R75 per share is a 49.6% premium to the 30-day VWAP before the first cautionary went out in July. This is because of the small free float and low liquidity, conditions that typically lead to a higher premium than average for these types of deals.
Assisted by the independent expert, the independent board’s opinion is that the deal is both fair and reasonable to Adcock Ingram shareholders.
If you would like to see what a deal circular looks like, then you’ll find it here.
From Anglo American to Anglo Teck – with Anglo shareholders to hold the majority stake (JSE: AGL)
It’s incredible just how much has changed at Anglo American
The announcement for the merger of Anglo American and Teck Resources set the market on fire – and in a good way. Mergers often lead to pressure on a share price, but the market seemed to love this one. Anglo closed 9% higher on the day.
The structure of the deal is that Anglo American will issue 1.3301 ordinary shares to existing Teck shareholders in exchange for each Teck class A common share and class B subordinate voting share. In other words, it’s an all-share deal.
The companies refer to this as a merger of equals, yet Anglo American shareholders will have around 62.4% of the merged entity and Teck shareholders will have 37.6%. The word “equal” is working rather hard here. Part of getting the deal across the line is the payment of a special dividend of $4.5 billion by Anglo American to its shareholders. They are doing this for “more balanced participation” in the deal, which is a nice way of saying that Anglo is currently too big for the deal to make sense for Teck.
Again, equal?
Another word that deserves to get paid more for its efforts is “synergies” – something that you’ll see in practically every merger announcement. This is the irritating cliché of “1 + 1 must be more than 2” and is much easier said than done to implement. The companies have noted an expectation of $800 million in pre-tax recurring annual synergies, with 80% to be achieved within two years after the deal. A further $1.4 billion annual EBITDA uplift from 2030 onwards based on the plans for the copper businesses.
Speaking of copper, Anglo Teck (as it will be known) will offer more than 70% copper exposure and will be a top five global copper producer. Find someone who looks at you the way the mining sector looks at copper.
Not that we needed any further reminders of just how far we’ve slipped on the global stage as a serious mining destination, but it’s worth noting that the new company structure will be firmly headquartered in Canada. This isn’t just a corporate domicile thing – the top execs will be based there, with various other corporate offices around the world.
It takes a long time to get deals like these across the line. It’s therefore not impossible that other bidders might emerge for either asset. The mining sector has seen many bidding wars in its time.
And in case you’re wondering, the plan is still to sell De Beers (good luck) and finalise the exit from steelmaking coal and nickel.
I’m old enough to remember when Anglo American didn’t want to entertain the BHP (JSE: BHG) deal because it was all too difficult. Since then, Anglo has done a bunch of things that look a lot like what BHP was looking for anyway. They’ve now agreed to do a deal that is at least as complex as the original BHP proposal, if not more.
Interesting.
BHP removes another legal overhang (JSE: BHG)
The Samarco Australian class action has been settled
A decade after the disaster happened, BHP is still cleaning up the mess that was the Fundão Dam failure. As one of the worst environmental disasters in Brazil’s history, this failure led to loss of life and displaced thousands of people.
As you can imagine, this resulted in extensive legal proceedings in various jurisdictions. There were many people who suffered losses from this event, including families who paid the ultimate price.
The latest update relates to a loss of the financial kind, with a class action suit brought by shareholders who acquired shares before the failure. This legal action has taken place in Australia where BHP is domiciled.
In an effort to just remove the overhang and get this particular legal action ticked off the list, BHP has agreed to pay the applicants A$110 million as a final settlement with no admission of liability. BHP expects to recover the majority of this amount from its insurers.
Newpark REIT is selling Crown Mines (JSE: NRL)
The deal is worth R101.4 million
Newpark REIT is one of the more obscure property names on the JSE. The portfolio is extremely concentrated, with literally only a handful of buildings in it (including my old haunts like 24 Central in Sandton and the JSE building). It’s about to get even more concentrated, as Newpark has announced the disposal of Crown Mines to an unrelated buyer.
The selling price is R101.4 million, with the valuation supported by the underlying triple net lease with Bidvest Afcom as the tenant. The lease expires at the end of 2029. The directors have noted in the announcement that they believe that the selling price is reflective of fair market value. The value of the property in the February 2025 accounts was R99.7 million, so they’ve sold it a a price that is ever so slightly above that valuation. The attributable profit was R11.2 million, so the buyer has picked this property up on an 11% yield. As a single tenant property in Joburg, that’s probably about right.
There is one related party consideration here though, with a fee of R507k payable to an associate of the CEO. This is a legacy agreement prior to the CEO becoming a director of Newpark. Although the board followed the right approach here for the deal (the CEO recused himself from voting on it), it did create a situation where the CEO didn’t vote on what is clearly an important deal for Newpark (a Category 2 transaction under JSE rules). This is why legacy related party arrangements like these should ideally be sorted out when boards change.
SPAR is heading for the exit from Switzerland while they still can (JSE: SPP)
And once again, they are incurring more pain just to get out
If you’ve been following the SPAR story for a while, then you might remember that they basically paid someone to drag the business in Poland away. I’m not exaggerating – they literally had to recapitalise the thing to get rid of it.
Thankfully, a lesson has been learnt from that about cutting losses and moving on. The business in Switzerland has been showing a worrying trajectory and SPAR has taken action, with a deal to sell it for just over R1 billion to Tannenwald Holding AG. There are also potential earn-out payments of up to R660 million due at the end of 2027 based on the performance in FY26 and FY27.
Unfortunately, there’s a catch – a pretty big catch. Yes folks, once again, SPAR has had to suffer a cash outflow just to make it go away. How is that possible?
Back in 2016 when every South African management team was desperately seeking offshore assets, SPAR acquired a 60% stake in SPAR Switzerland for R685 million. There was a put option for the remaining 40% that was exercised in 2021 for R920.4 million, with SPAR raising offshore debt to settle that amount. At the time they still owed plenty of money on the initial price, with total acquisition-related debt sitting at R1.455 billion. The trajectory of the rand over the past decade also doesn’t help.
Now, you might have noticed that the selling price of around R1 billion is well off that level. Indeed, SPAR needs to first pay R430 million towards the debt, with the buyer of the business taking on the rest of the debt as settlement of the purchase price. In other words, to be clear, there is a cash outflow for SPAR to get rid of SPAR Switzerland.
In return, SPAR is done with the debt and all guarantees issued by the SPAR group in relation to this business have thus been released. They also have the potential to receive earn-out payments.
If you can believe it, things still get worse. There’s another R253 million outflow to settle the Swiss Competition Commission investigation that led to a fine of this amount being imposed. SPAR initially wanted to appeal the ruling, but now they just want to get out of the country as quickly as possible. This tells you a lot about the prospects of the underlying business.
The offshore value destruction is truly breathtaking. But at least it’s over, which means that SPAR can now focus on the South African business (a competitive bloodbath) and the remaining exposure to the UK. Sigh.
A tough period for Super Group in which they tried to limit the pain (JSE: SPG)
The SG Fleet disposal was definitely the silver lining
Super Group has released results for the year ended June 2025. This period included the sale of SG Fleet that unlocked capital of R7.47 billion, of which R5.54 billion was distributed to shareholders as a special dividend. It also included some very tricky conditions in the rest of the business, with Super Group exposed to an automotive sector in flux. But there was also pressure in Supply Chain Africa, as you’ll soon find out. The group is forced to play life on hard mode at the moment.
From continuing operations, revenue dipped by 1.4% and EBITDA was down 2.4%. HEPS fell by 1.2%. It could certainly have been much worse under the circumstances, so this was a case of trying to minimise the pressure of a difficult environment.
Aside from the special dividend related to the SG Fleet disposal, that deal also did wonders for the Super Group balance sheet. Net debt to EBITDA is down from 2.96x to 0.75x, a huge improvement at a time when they really needed it.
Looking at the segmentals, it’s very important to note that the pressure was felt across more than just the automotive businesses. Supply Chain Africa saw revenue fall by 1.1% and operating profit by 7.6%, with various underlying drivers including lower export volumes of coal and copper. Supply Chain Europe reported another small trading loss and a dip in revenue by 0.1%, so that business is proving to be a real drag on return on assets.
The Dealerships South Africa business suffered a 6.7% drop in new vehicle sales, with disaster averted through a 5.6% increase in used car sales. We saw a similar trend at Motus (JSE: MTH) when they released earnings earlier this week. Here’s the trend that really counts: there’s a 2.5% decrease in luxury brand volumes and 20.8% growth in volumes of Asian manufacturers. All you have to do is look around on the road to see this in action.
Where Dealerships South Africa managed to stem the bleeding at a drop in operating profit of just 1.1%, there was no such joy for Dealerships UK where operating profit tanked by 49%. New vehicle sales were down 7.9% and used vehicles were up 10.3%, with key brands like Ford really suffering. As a sign of the times, Omoda and Jaecoo has been introduced at various Ford dealerships in the UK. What a time to be alive!
The business that went in the right direction was Fleet Africa, with operating profit up 11.3% thanks to a revenue increase of 9.7%.
Despite the numerous challenges, Super Group still expects to grow earnings in the coming year. There are loads of factors at play here, with the Southern African commodity supply chain as a particularly sensitive area that has numerous external variables.
WBHO proves that construction can actually make money (JSE: WBO)
This makes a nice change for the sector
When a construction sector update pops up on the market, investors brace themselves for a story of tough conditions and usually a major contract somewhere that has led to vast losses. Thankfully, WBHO isn’t here to add to that nightmare. In fact, they’ve gone firmly in the right direction in the year ended June 2025 and they have the dividends to prove it!
Revenue from continuing operations increased by 3.5% and operating profit was up 13.5%. HEPS from continuing operations increased by 12.7%. The order book is up 22.9%, so things are looking good for the coming year as well.
South Africa contributed revenue growth of 1%, while Rest of Africa was up 14.6%. The South African business is much larger though, hence why the group number comes out where it does. The UK business also did well, with revenue up 5%. Notably, one of the drags in performance in the South African business was a lack of building projects in Gauteng. That tells you something about investment in fixed assets in what is supposedly the economic powerhouse of the country.
WBHO’s management team feel confident enough to have declared a final dividend of 300 cents, taking the full-year dividend to 620 cents. That’s significantly higher than the prior year at 460 cents. Despite this, the share price is down 19% over the past 12 months.
Construction, hey. It’s not for me.
Nibbles:
- Director dealings:
- Des de Beer has bought another R2 million worth of shares in Lighthouse Properties (JSE: LTE).
- Although it comes through as a director dealing, pledges of shares aren’t a dealing in the traditional sense. They are merely the use of shares as security on a loan, which means there may never be an actual dealing. Disclosure requirements bring such pledges into the net though, giving the market an indication of how directors are using their shares as security. At Stor-Age (JSE: SSS), directors have been renegotiating their loan facilities with Investec and this has led to a reduction of the shares that have been pledged as security.
- In July this year, Sibanye-Stillwater (JSE: SSE) announced the acquisition of Metallix Refining. At that time, the estimated purchase price for the equity was $82 million. All conditions for the deal have now been satisfied and so it has gone ahead. Due to working capital movements since June, the eventual price was $78 million in cash. This values the business at $129 million on a debt-free business. This deal strengthens Sibanye’s market position in recycling in the US.
- Here’s something interesting: Barloworld (JSE: BAW) announced that Silchester (the minority shareholder that has made tons of noise about the offer by the consortium) has reduced its stake in the company to 14.754%. Meanwhile, Absa Capital Securities has moved up to 8%, a stake held on behalf of clients. And no, I’m not quite sure what is going on here. There are a few different permutations and I would prefer not to speculate. We will just keep an eye on it.
- Hammerson (JSE: HMN) announced that Rob Wilkinson will come in as CEO from 1 January 2026. This means that Rita-Rose Gagné will see out the rest of the year in the CEO role, retiring after roughly five years in the role. Hammerson is certainly doing a lot better these days, having been through a tough time in recent years.
- Brikor (JSE: BIK) announced two new coal off-take agreements. The first is to Eskom’s Grootvlei Power Station for three years and the second is to a private company for one year. This relates to the structure through which Brikor earns an agreed margin on off-take, with a minimum monthly goal of 150,000 tons.
- Murray & Roberts Holdings (JSE: MUR) announced that the court has granted an order to a creditor that places the company under provisional liquidation. The end is nigh for the listed holding company. As for its downstream subsidiary, Murray & Roberts Limited, that entity remains in business rescue.
Note: Ghost Bites is my journal of each day’s news on SENS. It reflects my own opinions and analysis and should only be one part of your research process. Nothing you read here is financial advice. E&OE. Disclaimer.
