AfroCentric sells Activo for up to R600 million (JSE: ACT)

The up-front amount is R350 million

On Christmas Eve, AfroCentric announced the disposal of generic medicine manufacturer and distributor Activo to Portuguese pharmaceutical group FHC. This is a show of faith in South Africa by FHC, a company that operates in 65 countries on 4 continents.

AfroCentric wants to focus on health administration, managed care and corporate solutions – a very different business model to drug manufacturing and distribution. This is therefore a sensible disposal of a non-core asset and a significant boost to AfroCentric’s balance sheet.

Speaking of the numbers, Activo’s consolidated net assets were valued at R299 million as at 30 June 2025 and profit for the six months to June was R9 million. But if you add on AfroCentric’s goodwill and sale claims, the value on the balance sheet is actually R1.1 billion.

This is important, as the maximum value of this sale is R600 million. There is a R350 million up-front payment and a R250 million earnout structure that kicks in after three years.

This puts them on the wrong side of the balance sheet value, but one has to wonder how the goodwill wasn’t already impaired when you consider the profitability of this business (just R18 million profit on an annualised basis vs. a balance sheet value of R1.1 billion…?)

This is a Category 1 disposal, so shareholders will need to vote on it.

The share price barely moved over the Christmas period, but this is a fairly illiquid stock with limited coverage. Expecting fireworks in a small cap when almost everyone is on holiday is unreasonable. With a market cap of R1.1 billion though, this deal is a large and important value unlock.

Aspen delivered a festive gift and is up 20% (JSE: APN)

The market likes the proposed sale of the APAC business

There’s inevitably at least one major thing that happens in the quiet time on the JSE between Christmas and the new year. Aspen certainly stuck their hand up in that regard, with an announcement on the 29th of December regarding the proposed disposal of Aspen APAC (Australia, New Zealand and Asia Pacific) excluding China.

The buyer is an Australian private equity investor. The price on the table is a delightful R26.5 billion on a cash-free debt-free basis (typical of how private equity deals are structured). This works out to a normalised EV/EBITDA multiple of 11x. Based on the depressed Aspen share price after a horrible year in 2025, this was good enough to drive a mega rally in the share price (it closed 23.7% higher on the day and has settled down at a level 20% higher than pre-Christmas).

The book value of the net assets being sold as at 30 November 2025 was R22.3 billion. The selling price is therefore above book value (not that this is the most important consideration by any means).

This disposal is a big decision to make, as this part of Aspen contributed 18% of revenue and 26% of EBITDA for the year ended June 2025. But at the right price, anything is for sale.

This deal obviously creates immense flexibility for Aspen going forwards. They can reduce debt and focus on major strategic opportunities like China, Mounjaro in South Africa and other GLP-1 products in Canada and other markets. It also gives them a better chance of fixing the broken Manufacturing business that obliterated the share price in 2025.

This is a Category 1 transaction, so shareholders will be asked for their opinion on the deal in the form of a shareholder vote. The response by the share price makes it pretty clear that the market loves the deal, so I can’t see why the vote would be a problem. A circular will be released in due course.

3,000 very expensive shares for Novus – the TRP is forcing the offer price for Mustek higher (JSE: NVS | JSE: MST)

Novus plans to fight this decision

In November 2024, Novus announced a mandatory offer for Mustek of R13 per share. This was triggered in the way that all such offers are triggered: Novus breaching the 35% ownership threshold. Now, these deals are normally not contentious things, but this one had a twist.

Complaints were laid with the Takeover Regulation Panel (TRP) that Numus (a broker and hedge fund manager) was acting in concert with Novus. This matters not just because of who the defined offerors would be, but also because of how the trades by concert parties can affect the mandatory offer price.

After an investigation lasting several months, the TRP has concluded that Numus is indeed a concert party of Novus. The evidence used to reach this decision includes a brokerage mandate, shared premises (at least on an informal basis), “anticipatory positioning” (the hedge fund acquired shares 44 days before any documented instruction from Novus) and a shift in pricing strategy on the market. Another important nuance is that communication between the parties and internal board documents described CFD positions as “shares” and “shareholding” and even “23% of the equity”. Using CFD positions to avoid disclosure is the kind of thing that makes the TRP very upset.

The TRP also notes that there was no evidence of Chinese wall procedures or other controls in place. I imagine that financial compliance professionals in South Africa will take careful note of the full decision.

What does this all mean? Well, thanks to the purchase of just 3,000 shares by the hedge fund in November 2024 at R15.41 instead of the R13.00 mandatory offer price, the entire offer now jumps to R15.41. That makes the deal 18.54% more expensive for Novus. It even applies retrospectively to those who already accepted the R13.00 offer!

As the concert parties hold 60.25% of the shares in Mustek, there are plenty of Mustek shareholders who can accept the higher offer. For reference, the current share price is R14.77, so the incentive is there to accept it at the increased price.

If you look in the original circular based on the R13.00 offer price, the bank guarantee required for the offer was R334 million excluding the phantom shares. Without any adjustment for the number of shares being acquired, the guarantee would be over R395 million under the new offer price!

Yes, that’s a difference of up to R61 million based on a share purchase of R46k at a higher price. You won’t see that every day. Needless to say, Novus plans to apply to the Takeover Special Committee for a hearing to try and reverse this pain.

You might have regretted a few share purchases in your life, but I think these 3,000 shares take the cake.

Nibbles:

• Director dealings:
  • The CFO of ASP Isotopes (JSE: ISO) sold shares worth around R7.7 million.
  • An associate of a director of Optasia (JSE: OPA) bought shares worth R4.2 million.
  • The CEO of Exxaro (JSE: EXX) bought shares in the company worth R2.2 million.
  • A director of a major subsidiary of AfroCentric (JSE: ACT) sold shares worth R172k.
  • An associate of a director of Spear REIT (JSE: SEA) bought shares worth R76k across two separate trades.

• Jubilee Metals (JSE: JBL) has closed the disposal of the South African chrome and PGM operations. The second cash instalment on the sale ($10 million) is expected to be received shortly. This leaves Jubilee as a purely copper-focused business in Zambia. It also makes it a juicy acquisition target, surely?

• Orion Minerals (JSE: ORE) updated the market on the progress being made to finalise the all-important funding and offtake deal with Glencore (JSE: GLN). The agreements weren’t finalised before the Christmas break, so Orion is looking to update the market early in January.

• Supermarket Income REIT (JSE: SRI) continues to do precisely what it says on the tin, with the UK-based property group acquiring three supermarkets in the UK for £97.6 million. The average net initial yield is 5.5%. This includes a Tesco site in Aylesbury, a Sainsbury’s in Sale and a Waitrose in Frimley. The unexpired lease terms vary from 11 years to 16 years and there’s a strong focus on the omnichannel features of the property (space for home delivery vans, click & collect). The deals are funded from existing debt and the pro forma loan-to-value is expected to be 43%. This is part of a busy period for the fund, with a goal of recycling £400 million in capital this year.

• Here’s a very sad update (especially over the festive season) and a reminder that mining is dangerous: Alphamin (JSE: APH) announced a fatal injury to an employee at the Mpama South mine in relation to an unexpected detonation during the connection of blasting wires. Mining activities were temporarily suspended for a thorough investigation, as one would expect.

• Visual International (JSE: VIS) previously announced in September that Serowe Industries was looking at subscribing for a minority equity interest in the company. The due diligence investigation is ongoing and the period of exclusivity granted to Serowe has been extended until the end of February. Exclusivity periods are not uncommon in these types of transactions. And no, their website still doesn’t work.

• Another day, another delay to the funding required for Shuka Minerals (JSE: SKA) to complete the acquisition of Leopard Exploration and Mining and thus the Kabwe Zinc Mine. Once again, Gathoni Muchai Investments has failed to provide the money to Shuka in time. The latest “promise” is for the cash to be available in the week commencing 5 January. The long stop date for the deal has thus been extended to 15 January.

• Oceana (JSE: OCE) announced that Bakar Jakoet (ex-CFO of Pick n Pay) has been appointed as lead independent director of the company.

• In its quarterly update as a suspended company, Sail Mining (JSE: SGP) reminded the market that they are in the process of making a conditional offer to repurchase all the shares in the company. This would naturally come with a delisting as well. The company has been suspended from trading since mid-2022 due to being far behind on financial reporting. This was initially due to three subsidiaries of the group being placed into business rescue, although the subsequent process to catch up on the financial reporting has clearly taken a very long time as well.

• PSV Holdings (JSE: PSV) has decided not to object to the JSE’s decision to delist the company after an extended period of the business rescue practitioners negotiating with other parties to try recapitalise and save the company. An update on the timing of the delisting will be provided in due course, but it won’t take long to happen.