Tag: acquisition

Alviva cautions on possible Tarsus takeover

By Stephen Gunnion for InceConnected

Alviva Holdings has confirmed it is in talks to buy rival group Tarsus Technology Group. That follows a report on TechCentral yesterday morning.

In a cautionary announcement, the ICT company said a due diligence investigation on Tarsus had been concluded. If the deal went ahead, it said it could have a material effect on the price of its shares.

The ICT group has already conducted due diligence on its rival and a deal could affect the price of its shares.

Johannesburg-based Tarsus, which was called MB Technologies before a rebranding five years ago, says on its LinkedIn profile that it was founded in 1985. It lists the products and services its subsidiaries provide as supply chain optimisation, cloud-based solutions and IT security services, amongst others. Apart from branches in five other provinces, it also has offices in Namibia and Botswana and representation in Zambia, Zimbabwe, Malawi and Mozambique.

Alviva’s businesses include Pinnacle, Axiz and Datacentrix, amongst others.

TechCentral reported that Alviva CEO Pierre Spies was CEO of Tarsus until 2013. It said the deal could raise competition concerns.

The company’s shares rose 3.65 to R8.30 on Tuesday.

FlySafair considers buying Mango

By Sumit Rehal for Simple Flying

FlySafair has expressed an interest in purchasing fellow South African carrier Mango Airlines, if it is put up for sale. The airline’s Chief Executive Officer Elmar Conradie confirmed the potential move on Tuesday.

Specific interest
IOL reports that FlySafair’s management approached South African Airways’ administrators about a possible acquisition of the low-cost carrier. However, Conradie made it clear that he is only interested in Mango and not any other aspects of its struggling parent company.

Mango was founded in 2006 and operates mostly domestic routes within South Africa. However, it does serve Zanzibar, the is a semi-autonomous region of Tanzania.

Conradie affirmed that a purchase of SAA Technical, which specializes in aircraft maintenance would not make sense. This is because his carrier is already serviced by Safair Operations (Pty) Ltd, its own parent company.

South African Airways has been going through a dire period as of late with struggling financials. Last month, South Africa’s National Treasury shared that it will provide a $1 billion bailout for the country’s flag carrier. However, this decision has been met with criticism by many members of the nation’s public due to the amount of funds being spent on the airline.

Strong growth
Meanwhile, FlySafair has been seeing great progress since it commenced operations six years ago. It currently flies to seven destinations across South Africa and it continues to increase its routes and frequencies.

Moreover, it is set to announce a new service to Durban from Johannesburg next week. Meanwhile, it has been slowly upgrading its fleet of 17 aging Boeing 737-400 aircraft to updated 737-800 models.

While the novel coronavirus outbreak is having a massive shift in the global aviation industry, Conradie claims that it has not had an impact on his firm’s operations as of yet. In fact, FlySafair is expecting capacity to increase by 15 percent this year and is yet to see any negative results on bookings amid the spread of the virus.

Ongoing situation
Several other airlines have been forced to cut many of their flights by the day due to the drop in demand. Additionally, some carriers have had to suspend services due to governmental policy, such as Kuwait’s recent decision to close its intentional airport.

South Africa currently has 16 active cases. However, with the World Health Organization now classing the outbreak as a pandemic, airlines across South Africa could start to feel the brunt of it. Ultimately, South African Airways will be keeping a close eye due to its existing struggles.

Pioneer Foods, PepsiCo in R24bn deal

Source: Fin24

The Competition Commission has recommended that the Competition Tribunal give the green light to a R24bn transaction that will see PepsiCo take over Pioneer Foods, the Commission said in a statement on Monday.

The deal’s benefits are “significant”, the Commission said, while recommending that it be approved subject to conditions including job creation, local investment and a minimum R1.6 billion B-BBEE transaction.

In 2019, New York-headquartered PepsiCo offered R110 per share – a premium of around 56% – to acquire Pioneer Foods, which manufactures brands including Weet-Bix, Sasko, Pro-Nutro and Spekko rice.

Global giant PepsiCo consists of six divisions which manufacture and distribute snacks and beverages that are already available in South Africa including Simba, Nik Naks, Lays, Doritos and Pepsi soft drinks.

According to the Commission, the proposed deal will result in “significant public interest benefit for South Africa”, and is unlikely to result in a substantial prevention of lessening of competition in any relevant markets.

It recommended that the Tribunal approve the merger, subject to several public interest commitments including a moratorium on retrenchments for a certain period, as well as the creation of jobs at the merged entity.

Further recommended conditions include a significant investment in the operations of the merged entity, the agricultural sector and the establishment of an enterprise development fund; as well as a B-BBEE transaction to the value of at least R1.6 billion that will promote a greater spread of ownership and participation by workers and historically disadvantaged South Africans.

By Louisa Hallett for RetailLeader

Staples is acquiring HiTouch Business Services to enhance the customer experience when it comes to technology, product assortment and services capabilities.

Staples is following the lead of rival Office Depot in enhancing its business services.

Staples is acquiring HiTouch Business Services to enhance the customer experience when it comes to technology, product assortment and services capabilities.

“We think Staples can bring tremendous value to HiTouch Business Services in the form of more robust capabilities and the scale that comes with being the industry leader for workplace solutions,” says Sandy Douglas, CEO of Staples.

“The combination of HiTouch’s sales organization and the strength of Staples will allow us to give customers an even higher level of service. We will continue to look for strategic opportunities like this one where we feel we can help create better options for businesses in the marketplace.”

HiTouch Business Services is a company that provides everything a business needs to operate, according to their company description. They will be a part of the Staples Business Advantage delivery organization, as well as supplying an expanded assortment of products and up-to-date e-commerce tools. HiTouch’s marketplace will still serve as its own independent platform.

“For the past 15 years, HiTouch Business Services has served its customers with pride and we look forward to the next chapter with Staples,” says John Frisk, president and CEO of HiTouch Business Services.

“We will continue to support businesses as we always have, but now with enhanced solutions from a best-in-class service provider. Together, we can create a new business model which leverages the size of a company like Staples, with the local touch HiTouch is known for, to create a truly differentiated offering.”

Staples is the world’s largest office solutions provider to date and is headquartered near Boston, with 1 255 stores located across the U.S. and 304 located throughout Canada.

By Andy Braithwaite for OPI.net

France-based Groupe Hamelin has re-entered the Australian school and office supplies market by taking a controlling interest in the Bantex Group.

Bantex went into voluntary administration at the end of 2017 and has been operating under a deed of company arrangement (DOCA) since February after reaching an agreement with its creditors. Hamelin CEO Eric Joan confirmed to OPI that Bantex is no longer under DOCA as the deed fund has now been paid in full following the takeover by Hamelin.

“The company was restructured during the voluntary administration and is now healthy,” said Joan. “The business was run for years with a lack of working capital and too high a cost structure. These problems have now been solved and we are very excited by the opportunity.”

Bantex Australia has been rebranded as Hamelin Brands Pty and will continue to market the well-known Bantex and Quill products in the country. The business is being run by Managing Director Franck Troquay. He was formerly running Hamelin’s operations in Malaysia, but has now relocated to Australia.

Former Bantex Managing Director Michael Stathakis is remaining with the company as Business Development Officer. Commenting on this appointment, Joan disagreed with OPI’s suggestion that Stathakis’ move into this role might be viewed as a temporary one.

“Even independent, Michael has always been part of the Hamelin family and we have known each other for almost 18 years,” said the Hamelin CEO. “The bailout of Bantex by Hamelin is for him the opportunity of a new start. He will bring his energy and market knowledge to a venture where we will bring management, structure and product
innovation. We believe it is a recipe for great success for all of us and Michael is just as excited as we are.”

The acquisition marks a return to the Hamelin fold of Bantex Australia. It sold the company to Australian Office Wholesalers in 2001 as it focused on integrating the Elba and Bantex brands in Europe following their acquisition by Hamelin in 1999.

Hamelin returned to the Australian market when it acquired the Canson brand in 2007, but it sold this business to FILA in 2016. Joan said the group was now “back for good” in Australia as it focused on its core school and office products categories.

Terms of the Bantex Australia deal were not disclosed.

By Jonathan Easton for PCR

Back in January, it was announced that Fujifilm is set to acquire Xerox to create an $18 billion printing monolith but cracks are starting to show.

As reported by The Wall Street Journal, a new lawsuit is claiming that Xerox CEO Jeff Jacobson pursued a deal, even though the company’s board advised him against it.

That board ‘advice’ actually came all the way back in November 2017 because the CEO’s position was under review. The paper appears to have learned this information from an amended suit filed in a New York state court on Sunday by Darwin Deason, a Xerox holder who opposes the deal. Deason claims that the deal ‘undervalues the copier and printer company’.

On Sunday, the company denied the claim, with Xerox Chairman Robert Keegan making a statement that: “Xerox CEO Jeff Jacobson was fully authorized to engage in discussions with Fujifilm and Fuji Xerox on the proposed combination.”

He added that the lawsuit “distorts many of the facts regarding the proposed combination with Fuji Xerox.”

Deason, combined with activist shareholder Carl Icahn, holds a not insignificant 15 per cent of Xerox shares. They are arguing that, from their perspective as shareholders, the deal “disproportionately” favours Fuji.

The lawsuit could also be read as something of a power play from the outspoken Deason who wants to shake up the board.

As Reuters points out: “Deason wants to nominate directors to the Xerox board, despite missing a deadline, arguing in his suit that the current board had made a series of significant decisions and disclosures to stockholders after the nomination deadline.”

The news may come as a shock, with all parties previously appearing delighted at the deal.

Steve Hoover, senior VP and CTO at Xerox, wrote for PCR:

“What is it about the combination that will help our customers? Is it because Xerox and Fuji Xerox perfectly complement each other with our technology? Customers will have access to a broader combined product portfolio and feel confident that they are getting the best product available for them, regardless of where in the world they are—whether it is Boise or Burma, Japan or Jakarta. Additionally, the new Fuji Xerox will have a fully unified supply chain, which will bring the products to our customers seamlessly across the globe faster than ever before.

“The new Fuji Xerox will combine two leaders with world-class technological capabilities and cultures of innovation. Together, we invest nearly one billion dollars in research and product development and will lead the evolution of our industry. We will go beyond print as we know it today and drive change in important areas like inkjet, printed electronics, and printing on three-dimensional objects. In addition, our customers can expect advancements in artificial intelligence and analysis of text, image and video, device security and intelligent workplace assistants.”

OPI acquires Independent Dealer e-zine

OPI has acquired the US-based Independent Dealer e-zine (ID) from De Groot Resources.

ID was first published in January 2007 by its founder and editor Simon De Groot, building on a 30-year career writing about the office products industry for the National Office Products Association (NOPA) and the now demised OfficeDEALER publication.

Having successfully championed the cause of the US independent dealer channel for more than a decade, and after 40 years of meeting almost daily publishing deadlines, De Groot has decided to transition slowly into a more balanced lifestyle that allows him to spend more time with his family.

As part of the handover agreement, De Groot will remain at ID as a consultant for a period of two years, assisting new editor and publisher Rowan McIntyre who will head ID’s already established team of experienced writers.
McIntyre is an experienced B2B journalist who is very familiar with the US business supplies industry, having written for OPI in a freelance capacity as well as writing and publishing for several years the official publication for the annual EPIC trade show on behalf of co-organisers Independent Stationers and TriMega Purchasing Association.

Commenting on the announcement, former independent dealer and now OPI’s CEO Steve Hilleard said: “I am delighted that Simon De Groot has entrusted us to continue the excellent work he has done with the ID e-zine and we look forward to building on that success.

“The publication’s mission will remain the same: to celebrate success in the independent dealer channel and to point the way to new opportunities for dealers to grow stronger and more profitably.”

De Groot added: “The good thing from my point of view – and for ID’s readers – is that the new owners, OPI, are well known to just about everyone in the industry and come to our publication with an outstanding track record of publishing excellence and journalistic integrity. Steve Hilleard and I have been competitors and friends for many years and I know he and his team are going to do a great job for the dealer community.”

A list of FAQs can be accessed here.

Source: OPI

Africa’s largest lender by market value plans to take on Britain’s biggest banks with the takeover of Aldermore Group as growth in its home market stutters.

FirstRand said on Monday it agreed to buy all of Aldermore after winning the backing of the U.K. lender’s board and its largest shareholder. The offer, which values Aldermore at about £1.1bn, will help the Johannesburg-based company diversify away from South Africa, which accounts for about 96% of earnings and where economic growth is slowing to near levels last seen in the 2009 recession.

“There’s plenty of opportunity for a challenger bank to go and keep giving it to the big banks,” Aldermore Chief Executive Officer Phillip Monks said by phone. The company hasn’t received competing offers and will now engage other shareholders after receiving irrevocable undertakings from funds advised by AnaCap Financial Partners, he said. AnaCap holds more than 25% of its stock.

Fast-growing Aldermore is among a group of U.K. banks seeking to challenge the dominance of the nation’s four biggest lenders, which control as much as 80% of the market, by offering faster lending decisions and more personalised customer service. FirstRand is also facing increased competition from smaller banks and financial-technology start ups at home.

FirstRand will create a new division for its UK operations that will be headed by Monks and include both Aldermore and FirstRand’s auto-finance business MotoNovo, the CEO said. It will now “need to sit down” with MotoNovo and “think about the opportunities that we can work out together,” Monks said.

Premium justified

FirstRand is offering £3.13 a share for Aldermore, 22% more than Aldermore’s closing price on October 12. Aldermore rose 2.5% to £3.10 by 14:45 in London on Monday, extending gains since its March 2015 initial public offering to 61%. FirstRand climbed 1.3% to R53.09 for a market value of R298bn.

The premium is justified because “we can accelerate our strategy, the fact that we get access to a banking license with a very well-regarded deposit franchise, the fact that we can get access to a great management team with a track record of delivery,” and the size of the transaction relative to FirstRand’s market value, FirstRand Deputy CEO Alan Pullinger said by phone.

The deal won’t impact the outlook provided when FirstRand released full-year earnings in September, he said, when the lender said it expects return on equity, a measure of profit, to be in the upper end of its 18% to 22% target. “The guidance we’ve given to the market around earnings growth, return profile and dividends will remain intact.”

Surplus capital

The acquisition comes as FirstRand seeks to build offshore funding so it doesn’t need to rely on the South African government’s credit rating. The nation’s local-currency debt is at risk of being downgraded to junk by the end of the year because of political wrangling ahead of the ruling party’s conference to elect a successor to President Jacob Zuma.

“We can fund this entire transaction with existing cash resources,” Pullinger said. “We’ve been building up a lot of surplus capital. We continue to build up excess capital and we think we’ll continue to generate surplus capital post this transaction.”

The lender isn’t allowing concerns around Britain’s decision to leave the European Union to halt its expansion strategy, he said, given that it has become accustomed to operating nine subsidiaries in riskier sub-Saharan African markets. “All of those markets have also got some pretty heavy challenges and some scary political stuff going on,” he said. “We don’t for a moment minimize the concerns around Brexit, but it is a relative issue for us.”

The purchase may limit FirstRand’s ability to make large acquisitions in the rest of Africa, Patrice Rassou, the head of equities at Sanlam Investment Management in Cape Town, said by email. Combining Aldermore and MotoNovo would create a more sustainable business as the “two are complementary,” he said.

‘Glorious’ run

FirstRand needs approval from 75% of Aldermore’s shareholders for the deal to go through, FirstRand spokeswoman Sam Moss said in a text message.

“Aldermore’s pretty glorious two-and-half years as an independently listed company appears all but over,” Ian Gordon, the head of banks research at Investec Bank Plc in London, said in a note. “We assume completion on the agreed terms within four months. We continue to anticipate little likelihood of any counter-bid or ‘sweetener’ to the existing offer.”

Aldermore released an earnings update on Monday that showed an improvement in its tangible net asset value to £1.76 from £1.525 at the end of 2016. That values FirstRand’s offer at 1.78 times, “which we see as reasonable, but hardly over-generous”, Investec’s Gordon said.

By Donal Griffin and Renee Bonorchis for Fin24

Amazon has sent shockwaves through the food retailing business with its near $14-billion acquisition of natural and organic food chain Whole Foods.

The move has dominated the financial news over the past three days and has been called a game-changer for the food retailing industry, but could there be wider ramifications for the business supplies industry? We suggest a few things to think about…

Whole Foods locations could be used as collection points for Amazon online sales, providing customers with more delivery options.

Whole Foods stores could act as local distribution hubs for fast delivery, two hours or even less, and give Amazon a stronger last-mile delivery presence.

Amazon’s move could have a disruptive effect on the wider food retailing industry. There is already speculation about the need for accelerated consolidation in the mass and grocery sector, and if that happened that would affect vendors that sell into these retailers.

Amazon has been testing more consumer-friendly retail concepts, such as its Amazon Go initiative where customers just pick items off shelves without the need to go through a checkout. Acquiring Whole Foods will give it a wider test platform and could lead to faster adoption of some of these shopping innovations as well as speeding up digital transformation in the retail sector in general.

We have previously downplayed the idea of Amazon acquiring retail locations in the business supplies channel because there was no indication that it would make a significant move into the retail space. That has now changed, and the Whole Foods deal validates Amazon’s belief in an omnichannel experience that combines the digital and physical worlds.

Could this mean that Amazon now looks to acquire retailers in other business segments, such as office supplies, and that Staples or Office Depot’s stores could be on the Amazon radar? Possibly, especially if Amazon is not happy with the way that Amazon Business is growing; it hasn’t updated its customer and sales figures on Amazon Business in the US since April 2016. Is that because the growth rate has slowed and it’s not getting the traction it thought it would after Amazon Business’ initial success?

The Whole Foods acquisition is reportedly being driven by difficulties Amazon was having in growing its Amazon Fresh grocery delivery business. If Amazon Business is stalling or not growing fast enough, then why wouldn’t Amazon look at buying growth? We now know that this strategy is part of Amazon’s playbook.

By Andy Braithwaite for OPI.net

Bidvest group, buoyed by a war chest of $1 billion (R12,9-billion), is on the hunt for local and international acquisitions as the company seeks organic and acquisitive growth.

Chief executive Lindsay Ralphs said the company was continuously pursuing select international and local opportunities to complement its existing offerings.

“We have ample headroom to accommodate expansion opportunities. We’d be able to raise $1 billion should we need it, or about R14 billion to R15 billion, and that has been confirmed by a lot of the bankers,” Ralphs said.

The company’s expansion plans come a year after it spun off its food service division, Bidcorp, in a $5 billion listing on the JSE.

In October, Bidvest acquired Brandcorp, a distributor of industrial and consumer products.

The group said the acquisition of Brandcorp contributed R535 million to its revenue and R71 million to its operating profit for the period.

The food service unit accounted for 60 percent of Bidvest’s sales in the six months to the end of December 2015.
The group yesterday reported a 4.4 percent rise in half-year profit.

Earnings up

Headline earnings per share increased to 510.3cents for the six months to December, from 489c in the comparative period.

Revenue rose 4.1 percent to R36 billion, and the company’s trading profit increased by 3.2 percent to R2.8 billion.
Cash generated from operations shot up 30 percent to R1.8 billion.
Bidvest declared an interim dividend of 227c per share.

The company’s seven businesses had mixed results for the period.

The services unit went up 5.2 percent to R6.4 billion, accounting for 27 percent of the company’s trading profit.
The freight business’s revenue decreased by 18.6 percent to R2.4 billion, while the automotive division reported a 1.8 percent increase in revenue to R12.3 billion.

The office and print business’s revenue declined by 1.4 percent to R5 billion.
The financial services unit’s revenue surged by 32.7 percent to R2 billion, while the commercial business’s revenue increased by 24.8 percent to R3.7bn.

The company’s electrical business recorded a marginal increase of 1.9 percent to R2.7 billion.
However, profits of its Namibian business nosedived by 80 percent to R23 million, accounting for just 1 percent of the group’s total trading profit for the period.
Bidvest said this was because of a reduction in fishing quotas. The group owns 52 percent of Bidvest Namibia.

Bidvest shares dropped 1.02 percent on the JSE to close at R163.31.

By Kabelo Khumalo for www.businesslive.co.za

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