Barloworld will spin off and separately list its car rental and leasing business, marking the final step in a five-year journey during which the industrial company trimmed down its sprawling portfolio to focus on core earth-moving equipment, as well as food procurement businesses.
Barloworld said Zeda will list separately in December, subject to regulatory approvals, wrapping up the portfolio reorganisation that began in 2017 when Dominic Sewela took over as CEO.
Zeda will house Avis and Budget, well-known and established brands in SA which also operate in 10 other sub-Saharan countries. Their collective mettle was, however, tested during the peak of the pandemic when leisure and business tourism numbers dried up.
Sasfin Wealth chief investment strategist Craig Pheiffer said Zeda would likely to do well as a stand-alone business as leisure and business travel continues to improve off a low Covid-19 base.
“The unbundling of the Zeda business brings the company full circle from its days as Avis, a listed entity under then CEO Grenville Wilson. Avis was successful then as a stand-alone business and it should land feet firmly up with its listing in December,” Pheiffer said.
The listing price and projected market valuation will be released next week, Barloworld said on Monday in its year-end results.
The new listing will come as a welcome boost to the JSE, which has been plagued by a number of delistings in recent years. The local bourse currently has 315 companies listed on its platforms compared with 800 in early 2000.
“This is a bittersweet moment for Barloworld. While we conclude our restructuring and portfolio shift to defensive, relatively asset-light and cash-generative industrial sectors, based on a business-to-business operating model, we are also letting go of an incredibly strong business whose adaptability has taken it from strength to strength,” Sewela said in a statement.
“This decision was taken in the interest of maintaining value for our shareholders. As two separate companies each business will be able to operate in a more focused and efficient manner — actively pursuing our growth ambitions in different sectors and verticals.”
Zeda will list on the JSE’s main board on December 13 with one share allocated for each Barloworld share held.
Barloworld, which supplies industrial gear such as earthmoving equipment and power systems to customers in the mining and construction sectors has been on a mission to streamline its business and capital allocation to focus on its industrial equipment and services and consumer industries segments.
“Being a stand-alone business will enable better focused execution of our integrated mobility strategy, which caters to the evolving customer’s needs in our markets of operation,” Zeda CEO-designate Ramasela Ganda said.
Year-end results
Group headline earnings per share from continuing operations were up 16% to R11 while revenue from continuing operations advanced 15.4% to R39.4bn.
A final ordinary dividend of R2.95 resulted in a total of R4.60 for the year, while a special dividend of R5.50 was also declared.
The company’s operating environment across its different markets remains challenging as Covid-19-lockdowns are still in place in China and the war in Ukraine continues.
“Barloworld’s results were well received by the market, even on a negative day overall on the JSE,” said Devin Shutte, head of investments at the Robert Group, adding that the unbundling and special dividend were the highlights.
The group’s strategy of consolidating its portfolio to asset-light, cash-generative businesses makes sense, he said.
The share price surged as much as 9% before pulling back to close 1.73% higher at R107.86.
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