Remgro, the investment holding company chaired by Johann Rupert, says it is looking for a 50-50 partnership in a possible buyout and delisting of its largest asset, Mediclinic.
At investor-day presentation on Tuesday, CEO Jannie Durand fielded a spate of questions over Mediclinic, and while he said the information he could provide was limited, the group was looking for an equal partnership — implying that Remgro is looking to take its stake in Mediclinic to 50% from its current 44.6%.
“We will invest alongside an equal partner, and given our meaningful pre-existing stake, the incremental cheque size for us is relatively more manageable,” said Durand.
Mediclinic has rejected a £2bn (R38bn) takeover offer from Remgro and partner MSC, and they now have until July 7 to make another, should they choose to do so. At 463p per share, a rejected offer price, Remgro would need to spend about £184m to bring its stake to 50%.
Durand declined to go into details, but noted that markets were “fragile.” Analyst have described Remgro’s offer as “opportunistic” given SA’s most valuable hospital group is now on a recovery path from Covid-19, which cut heavily into margins as non-essential surgeries were halted and hospitals spent more on staff and equipment.
The offer for Mediclinic is the latest corporate action by Remgro, which in recent months has agreed to deals with Heineken to offload Distell and with Vodacom to tie up their respective fibre businesses.
The Mediclinic offer had fuelled speculation that further announcements may be on their way, notably for RCL Foods, which includes the struggling Rainbow Chicken business. Remgro holds 80.4% of RCL Foods, an intrinsic value of R9.3bn, but it has struggled in recent years due to inferior chicken genetics among other issues.
Durand said on Tuesday that while it was possible to unbundle chicken, more work needed to be done, as being successful in the chicken business entailed being a lower-cost producer.
“I don't think chicken on its own can be unbundled at this point in time; it is not well capitalised and they also need shareholder support,” he said.
Rainbow has brought in new management and decentralised decision making, which had already made a big difference in areas such as costs, said Durand.
“I've always been a chicken pessimist, but I've probably become more of an optimist that we will fix it,” he said.
He also downplayed any speculation that Remgro is looking to shake up its business model, or is looking to de-list. “I'm a big believer in investment holding companies, especially in the SA environment, where SOEs that should play part of this role to provide cheaper capital [and] access to capital are not performing well,” he said.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.