Aluminium group Hulamin’s share price fell the most since the company was first listed on the JSE in 2007, after a potential suitor pulled out of a deal to buy the business.
By the JSE’s close the share price had fallen 27.57% to R3.60, wiping about R440m off its market capitalisation.
Hulamin first put out a cautionary announcement in October 2021 without giving details of the potential sale of the business. On Monday, when more detail emerged, the board of directors said they believed at the time the deal would have been “beneficial to Hulamin and would facilitate the growth of the business”.
The parties went as far as to conclude a deal price that was “considered fair and reasonable” and constituted a “substantial premium” to the Hulamin share price at the time. Unfortunately the purchaser was “unable to agree satisfactory terms with all stakeholders”.
On the fall in the share price, CEO Richard Jacob told Business Day that “it seems that the market may have priced a premium into the share price after the cautionary announcement late last year that is now being unwound out of the price”.
The manufacturer remained mum on who the potential buyer was, saying it “cannot disclose this at this time”. With aluminium production being particularly energy-intensive, the poor electricity supply by Eskom may have spooked the potential buyers.
Hulamin said that the possible suitor said it was concerned about global economic uncertainty, with much having changed since the deal was first mooted.
Hulamin has in recent years benefited from rising metal prices and the growing beverage can demand amid a glass shortage that hit SA. But the war in Ukraine, higher inflation, supply-chain issues and Covid-19 lockdowns in China have affected the global economy. Russia accounted for about 6% of global aluminium supply before it invaded Ukraine, along with being a major exporter of oil, coal and natural gas.
The Industrial Development Corporation, JL Biccard, Ninety One and Kagiso Group are among the major Hulamin shareholders.
Correction: June 6 2022
An earlier version of this story said Hulamin had announced its potential sale in October 2021 when in fact it has just issued a cautionary without giving details.
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