Novus will be getting less money for their print letting business (JSE: NVS)

The due diligence has resulted in a downward price adjustment

Novus is in the process of selling the Novus Print Letting Enterprise. The original agreed purchase price was R91.7 million, subject to due diligence.

It doesn’t happen often, but sometimes a due diligence does end in a material change to the deal terms. This can be because of something that comes up in the due diligence itself, or because of a broader geopolitical issue that spooks the buyer and incentivises them to find something in the due diligence process that can be used as an excuse.

We don’t know exactly what happened here, but we do know that the due diligence process for this deal led to the purchase price being adjusted downwards to R85 million. That’s a reduction of over 7%.

A further change is that the fulfilment date for conditions precedent has been extended to 30 April 2026. This is a housekeeping thing, rather than an issue for Novus shareholders.

A dip in value of R6.7 million isn’t going to break the bank vs. the Novus market cap of R1.85 billion, but it’s still the kind of news that shareholders would prefer not to see.

Prosus sells part of its Delivery Hero stake (JSE: PRX | JSE: NPN)

Unusually, I own shares in both the seller and buyer in this deal

Prosus recently acquired Just Eat Takeaway.com. The approval for the deal by European regulators included a condition related to a reduction in Prosus’ stake in Delivery Hero. The condition is rather vague, with Prosus required to offload enough of the stake for it be considered a non-influential holding.

Before the latest transaction, they held 26.3% of Delivery Hero – a stake that would be considered significant minority ownership. But now they are selling a 4.5% stake to Uber, reducing the Prosus holding to 21.8%.

Interestingly, Prosus remains “committed to completing the sale of the remainder of its stake in Delivery Hero” – a statement that sounds like they are going to exit the entire thing. It wouldn’t make much sense to retain a stake that gives them little or no influence.

The selling price is a 22% premium to the 1-month VWAP of Delivery Hero shares. It unlocks €270 million in value for Prosus. Given the recent pressure on the Prosus share price (down 33% from the 52-week high), they could do worse than apply the proceeds to further share buybacks.

I’m a shareholder in both Prosus and Uber. It’s quite rare that my money sits on both sides of a transaction!

What are your feelings on Prosus at the moment?

Spear REIT acquires Watergate Centre in Mitchells Plain (JSE: SEA)

Value-focused retail is a strong growth area in South Africa

Spear REIT is investing in Mitchells Plain, which means they will be participating in the value retail growth trend in South Africa – an area that has received plenty of attention recently.

Value retail refers to more affordable formats like Shoprite and PEP. This strategy is enjoying the benefit of an ongoing migration of South African consumers up the LSM curve. There aren’t many tailwinds in South Africa, but this is one of them.

The Watergate Centre is being acquired for R442 million. This represents a purchase yield of 8.37%. The weighted average lease duration is only 1.86 years, a function of the centre having been built around 9 years ago and thus most of the initial leases coming to an end.

This means that Spear is rolling the dice on the renewals process. This management team knows what they are doing. They have almost certainly done the work and arrived at the conclusion that they can manage the renewal process in such a way as to get an uptick in the yield.

Still, with much uncertainty around the forecast income for the year ending February 2028 (evidenced by only 28.4% being “contracted income” vs. 71.6% being “near contracted rental income”), there is risk here for shareholders.

The mitigating factor is that this type of centre is generally highly sought after by tenants, given the importance of the underlying customer base and the need to be located on busy commuter routes.

No risk, no reward!

Nibbles:

• If you’re a shareholder in Araxi (JSE: AXX), then be aware that they’ve had to issue revised pro forma financial effects for the Pay@ transaction. It looks like a mistake was made in the non-controlling interest calculation. It’s never ideal when things like this happen. The pro forma effect of the transaction is that diluted HEPS would decrease from 7.37 cents to 5.33 cents. They are playing the long game here and asking shareholders to do the same.

• There’s practically zero liquidity in the stock of Newpark REIT (JSE: NRL). Shareholders who feel stuck in this company might soon have a way out, as the company has released a cautionary announcement related to a potential proposal by a shareholder for a transaction. They describe it as an opportunity for shareholders to monetise “some or all” of their shares. Let’s see if anything comes of this.

• Trellidor (JSE: TRL) announced that Terry Dennison will be retired as the CEO and an executive director of the company with effect from 30 June 2026. Appointed as the CFO in 1999 (!) and then CEO in 2001, he’s been there for a very long time. The company has been listed since 2015, so he led that transition as well. The current CFO, Damian Judge, will be taking over as CEO. He’s been on the board since 2019 and took responsibility for sales and marketing over the past year, so that’s a proper succession plan. Jennifer Erasmus is the new CFO, having joined Trellidor around six months ago from Forvis Mazars. There’s a lot of work to be done at Trellidor and I wish them the best of luck!