The bidding war worked out nicely for Assura shareholders (JSE: AHR)

The private equity bidders have upped their offer to compete with Primary Health Properties (JSE: PHP)

Assura is hot property. KKR and Stonepeak have been trying to seduce shareholders with a cash-based offer (as is always the case for private equity bidders), while fellow listed company Primary Health Properties has been using its listed status to try and persuade shareholders into a merger. Of course, the real winners in the situation of competitive tension are the shareholders of the target company.

After Primary Health’s initial offer was deemed to be inadequate to even be worth a look, it appeared as though KKR and Stonepeak were on their way to a successful deal. Primary Health then swooped back in with an upgraded offer that was interesting enough to force the Assura board to pay attention, calling a halt to the meeting to vote on the KKR and Stonepeak deal while they conducted due diligence on Primary Health.

KKR and Stonepeak have further sharpened their pencils, returning with what they have called a “best and final” offer that works out to 52.1 pence per Assura share.

The Assura directors must be getting whiplash at this point, as they’ve now swung their attention back to KKR and Stonepeak and called this a fair and reasonable offer that they intend to unanimously recommend to shareholders.

They’ve also commented that after doing due diligence on the Primary Health offer, they’ve decided that it “presents material risks” to Assura shareholders – of course it does, as it’s a merger rather than a cash deal. Assura couldn’t help but get in a dig at Primary Health’s portfolio, which they note as having higher exposure to public sector rather than private sector assets.

Primary Health released an announcement later in the day that “strongly disagrees” with the Assura assessment. They also indicated that government spending on healthcare is expected to be positive for the portfolio in years to come.

Cash is king. If someone puts a proper cash number on the table, that’s the deal that happens. This is how life works.

MultiChoice always seems to be in even more trouble than I thought (JSE: MCG)

They are losing linear subscribers locally and in Rest of Africa

Aah, MultiChoice – a company that boasts about 5.7% price increases in South Africa as “inflationary” and “disciplined” thanks to their strong cost control. This of course is while bleeding subscribers left and right, with 600k linear subscribers in South Africa having run for the hills. In Rest of Africa, the pricing increase was an average of 31% in local currency. While inflation in Africa is certainly much higher than what we are used to seeing in South Africa, the loss of around 600k linear subscribers elsewhere in the continent is an indication that perhaps their pricing strategy needs work. The total loss of 1.2 million subscribers is an 8% drop in the active subscriber base.

I don’t know what the incremental cost of adding a subscriber is, but it’s very hard to imagine that it wouldn’t be accretive to MultiChoice to be more affordable and attract more subscribers. The current strategy certainly isn’t working, with organic revenue growth of just 1% in the year ended March 2025.

They are still investing like crazy in Showmax, which of course they justify based on the loss of linear subscribers. This puts them squarely up against the likes of Netflix. Showmax subscribers increased 44% off a modest base, showing that there is some hope for that business. Still, group organic trading profit took a 9% knock thanks to the modest revenue growth being insufficient to offset the pressure of the investment in Showmax.

Once we move past “organic” numbers, we find a decline in revenue of 9% and a massive drop in trading profit of 49%. There was a free cash outflow of R0.5 billion in FY25 vs. an inflow of R0.6 billion.

The headline loss per share of 258 cents may be an improvement on the loss of 715 cents per share in the comparable year, but it’s still a substantial loss.

I can understand why MultiChoice needs to build a streaming offering. I just don’t agree with their approach to their linear business. In FY25, the South Africa linear business generated revenue of R33 billion and trading profit of R9.4 billion. By comparison, Showmax revenue was just R753 million and the trading loss was R4.9 billion – and that’s for the entire continent.

Again, this will hopefully become Canal+’s problem to manage. If it wasn’t for that transaction, it feels like MultiChoice would literally be running itself into the ground.

Naspers and Prosus earnings are through the roof (JSE: NPN | JSE: PRX)

I’m a very happy shareholder in the Bloisi era

I cannot overstate the importance of the management team in the companies that you invest in. In the previous era of Naspers and Prosus, I didn’t touch the shares as I had zero faith in the capital allocation strategy. In the Fabricio Bloisi era, it became obvious to me rather quickly that things were now different. I wrote about it at the time and indicated my decision to buy shares in the group (I chose Prosus). I’m so glad I did.

A trading statement for the year ended March 2025 reveals that core HEPS (which excludes gains on the sell down of Tencent) increased by 53.9% to 63.2% for Prosus, and 55.9% to 62.9% for Naspers. This is based on continuing operations, so it’s the best way to view the group. Including discontinued operations actually leads to slightly higher percentage growth rates.

Detailed financials are due for release on 23 June 2025.

Pan African Resources delivered in the second half (JSE: PAN)

The market gave me a gift in February and I took it with both hands

Back in February this year, Pan African Resources released an unfortunate set of interim numbers. The market hated them, mainly because Pan African went backwards at a time when the other gold miners were printing cash. The market dumped the shares, even though the company indicated that the second half should be much better for production and that a hedge on the gold price was due to expire at the end of February, giving them exposure to how strong the gold price had become.

That was good enough for me to say thank you to the market and buy the shares. Today, that position is 32% up. Not bad!

The second half has come through largely as promised, with record production at the company for a six-month period. Although they have fallen short of full-year guidance, coming in at 197,000oz vs. guided 205,000oz – 215,000oz, time has shown that the market overreacted.

Net debt is down 32% vs. the interim period and they expect to be debt-free during FY26 at current gold prices. This is helped by a production expectation for FY26 of between 275,000oz and 292,000oz, a jump of around 40% year-on-year thanks to things like the ramp-up at Evander being behind them now.

With the group approving a share buyback of up to R200 million, they are clearly feeling confident. With global geopolitics in such an inflationary position at the moment, I don’t blame them. I’ll be hanging onto my shares.

Nibbles:

• Director dealings:
  • The director of Italtile (JSE: ITE) who needs to sell pledged shares this month has managed to offload another R31.3 million of them.
  • Associates of two directors of Ascendis (JSE: ASC) – including the CEO – bought shares worth R54k in aggregate.
  • Here’s another large forced sale of shares by a Discovery (JSE: DSY) director in relation to the maturity of a collar transaction. In this case, it’s Barry Swartzberg. He sold shares worth R74 million.
  • The CEO of RH Bophelo (JSE: RHB) bought shares worth R25k.

• Here’s a surprise: the board of MTN Zakhele Futhi (JSE: MTNZF) has decided to fully unwind the scheme. This comes after a rally of 42% in the MTN share price this year. They announced the placement on Wednesday and a further announcement early on Thursday morning confirmed that they raised R3.0 billion in the process. They will now need to run through the settlement of the debt and the costs of unwind, with an announcement to come regarding the amount payable to investors.

• African Rainbow Minerals (JSE: ARI) has hedged a significant portion of its stake in Harmony Gold (JSE: HAR). This takes the form of a collar hedge over 24% of the stake held in Harmony, or 2.84% of Harmony’s total shares. They’ve bought 18 million put options at a strike price of R234.85 and sold 18 million call options at a strike price of R562.40. Both options are exercisable in June 2030 (on average). Harmony’s current price is around R253, so they are mainly hedging against downside exposure here. They also talk about how this gives them access to funding in the future on efficient terms, so presumably they are thinking of using the hedged portion as collateral at some point.

• With the mandatory offer circular out in the wild, Novus (JSE: NVS) is also able to acquire Mustek (JSE: MST) in the open market i.e. outside of the mandatory offer. They’ve acquired R26.4 million shares in this way, increasing their stake in Mustek from 35.07% to 38.60%.

• Sappi (JSE: SAP) is trying to increase its visibility to North American investors. With around 70% of the current shareholder base being South African, they are looking to attract more international investors over time. To help achieve this, they are joining the OTCQX trading platform. There’s some pretty decent liquidity on there actually, with a number of companies choosing this route rather than a full-blown listing on e.g. the NASDAQ.

• Speaking of visibility to US-based investors, AngloGold Ashanti (JSE: ANG) has been added on a preliminary basis to the Russell indices. There are a few of these indices, with AngloGold still waiting to see whether they are in the Russell 1,000 or Russell 2,000 (in addition to the Russell 3,000 and Russell Midcap) indices. This matters because of the large number of index-tracking funds that are driven by these indices. Those funds will now need to buy and maintain a holding in AngloGold.