Ascendis Health plans to delist from JSE

Ascendis Health plans to delist from the JSE, buying out shareholders with “internally generated resources”, subject to an independent assessment of the offer, sending the stock soaring as much as 13.4%.

The health and wellness group said on Friday that the board had initiated a process for a potential delisting, together with a conditional offer to repurchase shares at 97c cash each.

The shares had pared the gains to 9.8% by the close of trading on Friday, though they are down 10% in the year to date.

The company’s board said in the statement that it believed delisting is the best option available to unlock further value for the company and enable it to pursue initiatives such as acquisitions and disposals more effectively and speedily.

The delisting is also the most effective mechanism of unlocking and returning value to Ascendis Health’s shareholders, it said.

The decision comes after a review of the company’s options and the environment in which it operates.

The listed environment, while valuable in many respects for larger companies, has imposed regulatory and cost constraints that limit our ability to act on transactions that could unlock meaningful value.

—  Carl Neethling, Ascendis Health CEO 

While the business has a strong pipeline of attractive potential transactions, the additional regulations associated with maintaining a JSE listing, particularly for a smaller cap company, impedes agility and slows the ability to acquire new businesses, Ascendis said.

“The listed environment, while valuable in many respects for larger companies, has imposed regulatory and cost constraints that limit our ability to act on transactions that could unlock meaningful value,” said CEO Carl Neethling.

“As a smaller company, we continue to endure extreme scrutiny and we believe that operating outside the listed environment will provide us with greater flexibility to pursue growth opportunities and ultimately deliver enhanced value for all our stakeholders.”

Shareholder support and conditions for approval

The deal is subject to shareholder approval and the vast majority have indicated their support, Ascendis said.

The approval is subject to independent expert Forvis Mazars Corporate Finance evaluating the offer as fair, and is also conditional on the offer being accepted by shareholders holding not more than 20% of the Ascendis shares in issue.

“Over the past two years, Ascendis Health has executed a successful strategic turnaround, delivering strong financial results and establishing a robust foundation for growth. After eliminating the company’s debt incurred under previous management, the company is now able to fund a delisting transaction through a combination of internally generated funds and borrowings from RMB Private Bank,” it said.

Leadership recusals to avoid conflicts of interest

Neethling and director Theunis de Bruyn elected to recuse themselves from directors’ deliberations and voting on the matter while their associated shareholders will refrain from voting on any aspect of the proposed delisting.

Ascendis Health transitioned to an investment holding company from a pharmaceutical conglomerate in July 2024.

The shift aimed to simplify the group’s internal and operating structure, reducing overhead costs while giving more ownership to the managers of companies in which Ascendis was invested.

Earlier this year Ascendis noted that not long ago it had been insolvent, largely written off as a lost cause and trading at a market cap of less than R370m. It is now valued at R569m.

The company’s growth has been primarily driven by its medical portfolio, which includes five businesses that provide “life-saving medical devices” to SA’s public and private sector.

For the year ended June the group reported headline earnings per share soared 8.7c from 1.1c in the previous corresponding period.

With Jacob Webster

MackenzieJ@arena.africa