Tag: sale

Who has our petrol?

Cash-strapped consumers face another hefty petrol hike as The Department of Energy announced on Monday that a litre of 95 octane petrol will cost R14.01 inland and R13.52 at the coast from Wednesday.

And if that is not enough, the Central Energy Fund board chairperson has said that the fund is still busy calculating how much SA lost when 10.3 million barrels from its strategic fuel reserve were sold off in 2015.

The Central Energy Fund (CEF) can not yet say what price SA paid for the controversial sale of 10.3 million barrels of the country’s strategic oil reserves, or who now owns the stock, according to the chairperson of its board Luvo Makasi.

The secret sale by the Strategic Fuel Fund (SFF) – which is a subsidiary of the CEF – took place in December 2015, at a time when oil prices were at a historical low point.

Speaking to Power98.7 radio host Onkgopotse JJ Tabane on Monday evening, Makasi said that the CEF was still investigating the sale.

Bloomberg reported last month that law firm Allen & Overy led an investigation into the sale, which included a recommendation that a financial analysis of the sale be conducted.

But the fact that the analysis was completed by embattled auditor KPMG SA has caused delays in making the report public.

READ: Energy Minister wants assurance on KPMG analysis of oil sale
Minister of Finance Malusi Gigaba last month advised all government departments and entities to review all work done by KPMG to ensure their audit processes had not been compromised.

First rotation, then sale

In March 2016, three months after the sale took place, then-energy minister Tina Joemat-Pettersson claimed in her annual budget vote speech that the fuel had not been sold, but rotated.

“In 2015, we issued a ministerial directive for the rotation of strategic stocks by the Strategic Fuel Fund and this has resulted in the increased revenue base for SFF, whilst at the same time maintaining stocks within our storage tanks for security of supply,” she said at the time.

READ: AG to probe R5bn ‘secret’ oil deal
But earlier this year new Minister of Energy Mmamoloko Kubayi admitted the strategic fuel stock had in fact been sold off.

During Monday’s interview, Makasi also acknowledged the stock had been sold and not rotated.

But he said the CEF board was only involved in the transaction “at the end”, adding the board only got wind of the sale when a “a good amount landed in our (bank) account”.

A loss

Makasi acknowledged the fuel had been sold in a “depressed market” at a time when international fuel prices were low.

“If you look at where the market was at the time the product was sold, you would then have to make an assumption that there would have been a loss.

“But what we are busy with now, is we are trying to quantify what was the actual loss to the state,” he said.

He promised the CEF would “come back to the public” with the full details of what the loss amounted to.

Asked if anyone would be held responsible for the secret sale – which took place without the knowledge of National Treasury – Makasi reiterated that the scale of the losses first had to be established.

READ: MPs demand answers on ‘illegal’ fuel stock sale
“Where there is a loss, the Public Finance Management Act puts a positive implication on the board of CEF and all its subsidiaries to investigate those instances,” he said.

“So there will be consequences. And when those losses are established, there will be consequences on all those involved in the process.”

Makasi appeared to imply that the CEF was also still investigating who bought the oil.

“The stock never left our tanks,” he said. “But the question of ownership therefore, that is what we are busy now debating.

“There was an element of sensation around. (But) was there cause for concern? Yes there was.”

By Jan Cronje for Fin24

Shoprite to vote on Whitey’s R1,7bn share sale

Shoprite shareholders will vote on whether to approve a proposed repurchase of about R1.7bn of shares from former chief executive officer Whitey Basson.

Basson exercised a put option on May 2 that meant Cape Town-based Shoprite would buy 8.58 million shares from the ex-CEO, who stepped down as head of Africa’s biggest food retailer at the end of last year.

The original sale price of R211.01 a share was later reduced to R201.07, the 30-day weighted average price up to when Basson decided to use his put option. At least 75% of voting shareholders have to be in favour of the repurchase for it to be approved.

Shoprite shares fell 0.5% to R222 at the close in Johannesburg on Monday, valuing the company at R133bn.

Billionaire Christo Wiese, Shoprite’s largest shareholder and South Africa’s fourth-richest person with a net worth of R72.6bn, said August 22 he wasn’t expecting significant opposition from investors.

The put option, agreed to in 2003, ensured Basson didn’t “flood the market” with shares while he worked for the company and was also part of an incentive to retain him in the role, which he held for almost four decades, Wiese said at the time.

If the deal isn’t approved, Basson should have no difficulty selling the shares to money managers over the next few months, Syd Vianello, an independent retail analyst in Johannesburg, said by phone. The stock has risen since the put option was triggered, meaning Basson could get even more cash if he sells independently.

Wiese owns about 15% of Shoprite’s ordinary listed shares and a further 30% in voting rights. The Public Investment Corp, which looks after state pensions and is the continent’s biggest money manager with assets of R1.6trn, holds about 10% of the company and is its second-largest shareholder.

By Janice Kew forBloomberg News

Government may sell stake in Telkom to fund SAA

The revelation on Wednesday that finance minister Malusi Gigaba is considering selling a big chunk or possibly even all of government’s 39.3% in Telkom, at face value, is fantastic news.

There is absolutely no reason for government to continue to hold onto a significant stake in the telecommunications operator — if there ever was one, which is debatable.

On paper, now is the right time to sell the company. Under the leadership of CEO Sipho Maseko and chairman Jabu Mabuza, the company’s fortunes look better now than they have in many years.

President Zuma’s disastrous eight years in office mean the chickens are coming home to roost
The problem with selling distressed assets is they go for a song, raising almost nothing for the fiscus. Telkom is no longer a distressed asset — in fact, it is in such a strong position that it is taking the fight to its big mobile rivals, winning market share and giving them a serious headache. Consumers are loving it. Maseko’s praises should be sung from the hilltops.

It’s the wrong time to privatise state-owned assets when they are in trouble. It’s far better to turn them around, and then hive them off, ensuring the private investors that are brought in contribute meaningfully to the fiscus, in the process hopefully avoiding tax increases or even allowing for tax relief. South Africa desperately needs a well-managed programme of privatisation.

Black hole

The possible sale of Telkom — revealed in a secret cabinet document leaked to the Democratic Alliance — is being considered to raise money to throw into the black hole that is the national airline, South African Airways.

(That the DA was given this document is testimony to the fact that the ANC is a house divided. Secret documents are being leaked to the opposition, providing insight into the shambolic state of the ruling party. But that’s another story.)

So, Gigaba has a R10bn-plus hole to plug at the floundering SAA, which has been mismanaged for years under the watch of chairwoman Dudu Myeni, a close friend of President Jacob Zuma.

The concern is government is selling a good asset — using good money — to prop up an airline that should have been privatised years ago (and, of course, that shouldn’t have been allowed to be driven into the ground in the first place by incompetent managers).

But there’s a bigger issue here. Gigaba, facing a crisis over SAA, appears to be caught like a deer in the headlights, unsure about what to do. This is symptomatic of a finance minister out of his depth and, worse, a government that is failing.

Government already chased away Korea’s KT Corp, sending a terrible message to foreign investors that the country is not open for business.

If Gigaba simply starts selling government’s Telkom shares on the open market, it could prove disastrous for the telecoms operator’s shareholders. Not properly managed, the company’s share price could be decimated as the state dumps its holding.

Far better would be to sell the stake to someone through a managed process, led by advisers. But sell it to who?

Government already chased away Korea’s KT Corp, sending a terrible message to foreign investors that the country is not open for business. If there are potential foreign buyers, now is the time to ask them to step forward. But is this government prepared to sell the stake to a foreign company? Remember, it was the ANC government that almost scuppered Vodafone’s acquisition of Telkom’s stake in Vodacom, sending the rand tumbling at the time. Sanity, thankfully, eventually prevailed.

Local buyer?

Who locally could buy the stake? That’s far from clear. It’s unlikely the Competition Commission would permit one of Telkom’s big rivals to buy it. It’s not in consumers’ interests for that to happen as it would concentrate the market into the hands of three players.

But Gigaba, desperate for money to prop up an airline that has been ruined by his government, faces having his hand forced. The last thing he wants to — or should — do is to expand the budget deficit even further than it’s already stretched to bail out a bankrupt airline. He needs money from somewhere. Are there other options? Maybe. Government’s already sold a chunk of its stake in Vodacom to fund another state-owned disaster, Eskom. The Public Investment Corp, which invests public servants’ pension money, bought that stake. Maybe it will be asked to get involved again.

Whatever he decides to do, Gigaba can’t be rash about it. President Zuma’s disastrous eight years in office mean the chickens are coming home to roost. And the finance minister is in the unenviable position of having to try and fix some of the mess. The wrong decisions now could make things even worse.

By Duncan McLeod for TechCentral 

Staples finally sells up

Staples’ future under private equity ownership is all about online growth.

Having disposed of its international operations (including those in Australia and New Zealand) Staples has sold off the rest of ‘farm’ to a private equity group.

Sycamore Partners, a US private equity firm that specialises in retail, will pay US$6.9 billion for Staples, a company that has seen its sales, profits and store numbers decline in the wake of the online shopping phenomena, driven by the likes of Amazon.

Staples had sought to remain competitive in the online world by merging with Office Depot but the deal was blocked by US regulators last year and the companies abandoned the plan.

In its latest annual report, Staples was up front about the challenges it faced, stating it faced strong competition from wholesalers and local stationery stores.

“We also compete with online retailers such as Amazon.com, mass merchants such as Walmart and Target, warehouse clubs such as Costco, computer and electronics retail stores such as Best Buy,” the company said.

According to a report in the New York Times, Staples’s board and management decided to sell the company after shareholders had essentially lost faith in the business. Shares of the company were trading near US$7 earlier this year, having fallen sharply from about US$18 a share just two and a half years ago.

Sycamore’s offer of US$10.25 a share represents a 20% premium over the company’s stock price in early April, before initial reports of a deal to sell the company lifted shares.

Staples still sells huge volumes of paper, printer cartridges with a minority of its goods sold at bricks-and-mortar locations.

Around US$10.6 billion of its sales are delivered, compared with about US$6.6 billion sold in stores.

Source: Stationery News

Office Depot sells off Korean business

Office Depot has closed on the sale of its business in South Korea to private equity firm Excelsior Capital Asia.

Office Depot had previously disclosed its intention to sell the majority of its international businesses under a process that began in 2016.

“This transaction follows on the recently announced agreement to sell our businesses located in Australia and New Zealand,” Gerry Smith, CEO of Office Depot. “We are now one step closer to achieving our goal of divesting substantially all of our international businesses in order to focus on the growth opportunities available in the North American market.”

Excelsior Capital Asia is described as a Hong Kong and South Korea-based direct investment firm.

Source: www.stationerynews.com.au

Foreigner investors ditch local stock

Foreign investors have sold nearly R100-billion worth of South African equities in 2016 on a net basis, even as the country’s bond market attracted R62-billion from foreigners in the same period, according to JSE data.

While the SABMiller/Anheuser-Busch InBev (AB InBev) transaction accounted for the majority of outflows, SA’s economy had come under scrutiny as an emerging market investment destination, says Donna Nemer, head of capital markets at the JSE.

SA’s financial markets were also subject to external factors, including overall risk appetite for emerging markets, Nemer says.

“You just have to read the press to see that SA is not an attractive investment destination at the moment,” says Kokkie Kooyman, portfolio manager at Denker Capital.

“I think it’s simply that plus the fact that most index stocks in SA are fairly expensive,” he says.

Foreigners have been net sellers of local equities to the tune of R98,99-billion in 2016. SABMiller and AB InBev accounted for R43-billion and R21-billion of these sales, respectively.

The increase in the local share register of AB InBev was not enough to offset the outflow as a result of the delisting of SABMiller, Nemer says.

You just have to read the press to see that SA is not an attractive investment destination at the moment,
Kokkie Kooyman, portfolio manager at Denker Capital
“Overseas buyers can buy any other brewer, including AB InBev, on their own stock market. They don’t need to come here to buy it,” says Wayne McCurrie, portfolio manager at Ashburton Investments.

McCurrie says AB InBev was expensive, considering the short-term headwinds facing SABMiller in emerging markets. It had also sold some of its best brands to appease competition authorities, which had diminished its growth prospects.

Mining, media, mobile telecoms and banking were, respectively, the next largest contributors to equity market outflows on a sector basis, with Naspers posting net foreign sales of R12,9-billion, followed by British American Tobacco at R11,9-billion.

The country’s bond market, meanwhile, had attracted R62.2bn from foreign investors in 2016, compared with R13bn over the same period in 2015. With developed market bonds yielding low or even negative returns, investors have sought yield in emerging market debt.

Considering the large difference between developed market bond yields and South African bond yields, known as the carry, the rand would have to weaken greatly for foreign investors to be out of money, McCurrie says.

By Hanna Ziady for www.businesslive.co.za

Office Depot has followed through on its plan to offload its European operations with the announcement of a purchase agreement with private equity firm The Aurelius Group.

Office Depot, which owns the OfficeMax business in Australia and globally, had previously disclosed its intention to explore strategic alternatives regarding its European business, under a process that began earlier this year.

“The sale of our European business will allow us to streamline operations and focus our resources on markets that will provide the best opportunity to implement our recently announced three-year strategic plan,” Roland Smith, out-going chairman and CEO for Office Depot, says

Since 2005 Aurelius has completed more than 70 transactions across Europe and specialises in investing in companies and corporate spin-offs, as well as complex divisional carve-outs from corporates.

The transaction is structured as an equity sale, for nominal consideration, with the buyer acquiring the European business with its assets and liabilities.

Annual revenue for the European business is approximately $2,3-billion.

The transaction, which has been approved by Office Depot’s board, is subject to regulatory approval from the European Commission and consultation with the central works council, which represents employees in France. The transaction is expected to close by the end of 2016.

Source: www.stationerynews.com.au

As speculation gains traction that Walmart is selling off its anchor shareholding in its African partner Massmart, industry pundits are concerned that finding an investor with enough funds to take over may prove difficult.

At Walmart’s AGM in Fayetteville, Arkansas, this week, shareholders in the world’s largest retailer may stew over the health of the US economy, the technology threats posed by online giants such as Amazon, and its African investment. – which, after five years, is struggling to maintain momentum.

When Walmart bought a majority shareholding in Massmart, the owner of Makro and Game was trading at R148, costing the US retailer $2.5-billion.

Now the stock is trading about 23% lower since the deal was approved by anti-trust authorities in March 2012.

In January this year, the share was trading as low as R83.20 – a 48% decline in value since the takeover.

The group had to scale back on its growth strategy having opened 11 new stores in Africa from the 27 they had in 2012.

Earlier this year, Barclays plc announced it will sell off its stake in its African business, showing the waning investment sentiment for the continent.

Meanwhile, Walmart’s share price has increased more than 17% despite lukewarm growth in its home market.

Massmart’s performance in Africa has been further dampened by the struggling South African economy.

Sébastien Delsemme, a consultant analyst for Kantar Retail, says: “We have heard from various sources Walmart have identified Africa as part of the divestment in their current portfolio – among others.
“The problem [will be] finding an investor with enough funds to take over.”

Delsemme described the sell-off speculation as “just rumours”. However, the speculation has foundation in precedent.

In 1999, Walmart bought into South Korea, to exit seven years later. Similarly, it pulled out of Germany after eight years.

Poonam Goyal, senior retail analyst at Bloomberg Intelligence, says Walmart had also been struggling in the UK because “they don’t have the price perception of being low-priced – some of the other retailers have taken that perception away from them”.

She adds: “It’s not certain that Walmart will even chase the demand because it’s an unprofitable way to chase it.
“So while they like to be lower-priced, they don’t like to be giving up their margin entirely, which is what some of the grocers are doing in the UK.”

Walmart’s overriding strategy is “to not just be a competitor, but to own the market. They want to be the main player.”

But in the local retail space, Walmart and its partner Massmart have not been able to steal market share from competitors such as Shoprite and Spar.

Although Massmart may not meet Walmart’s expectation in terms of returns, “Walmart does tend to be long-term oriented with its retail investments”, says Chuck Cerankosky, MD of Ohio-based Northcoast R esearch.

“It spent a lot of time repositioning Asda years ago and it might be going through a bit of that again in the UK. So maybe there is work to be done at Massmart and they just haven’t made it a top priority because there obviously has been a lot of effort made to improve the performance here in the US.”

According to Walmart’s 2016 annual report, the company has 6 299 stores operating outside the US, including 346 in Japan. It has 408 stores in 13 African countries.

However, Joseph Feldman, a senior MD at Telsey Advisory Group in New York, says that although he hadn’t heard anything specific from Walmart about a possible sell-off, “Walmart is more of a harvest story as opposed to a growth story”.
He adds: “It’s not a growth story the way a 10-store retailer has potential to go to 500 stores. Obviously Walmart is a mature business that has been able to generate positive traffic.
“Walmart wants to stay the course and emerging markets makes sense given the nature of what they sell and how they sell it. They are trying to help people live better and save money with people living better.”
But entering a market through a partnership “almost makes it easier to exit”, Goyal points out.

“It’s really about the return – whether they can get the returns on investment that they expected from that market, and whether the partnership is working well for them and there’s room for them to at some point move up the chain and become number one.”

Walmart was not available for comment at the time of publication.

By Palesa Vuyolwethu Tshandu
This article was first published in Sunday Times: Business on 05/06/2016

Pelikan could be up for sale

Pelikan AG, the German-listed unit of stationery manufacturer Pelikan International Corp Bhd (PICB), has appointed investment bank BNP Paribas to look at “strategic options” for the company, according to the Malaysian Star.

The Star reports that Pelikan AG has made a filing with the Frankfurt Stock Exchange with a “a teaser document issued by BNP Paribas to potential bidders for Pelikan AG.”

According to sources, the entire company could be sold “at the right price”. PICB currently owns 98,66% of Pelikan AG.

Source: www.office-times.com

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