Shares in Bell Equipment surged 49% after the founding family dangled a multibillion-rand buyout carrot before minority shareholders, in a move that will end the maker and distributor of heavy industrial machinery’s 30-year history on the JSE.
The Bell family, which holds about 70% of the company via an investment outfit called IA Bell, offered minorities R53 cash per share, a 56% premium to the closing price on Friday and valuing the company at about R5bn.
In reaction, Bell Equipment’s share price surged as much as 49.55% on Monday to touch its highest level since the company debuted on the JSE in 1995. It closed 45.74% higher at R49.55.
IA Bell counts Gary William Bell, Peter Charles Bell, the estate of the late Paul Allan Bell, Michael Allan Campbell, the estate of the late David Ian Campbell and Cecil Tree Africa Trust as owners.
The latest buyout offer is sharply higher than a 2021 buyout bid by the family, which had offered R10 a share.
For investors, the offer could present them an easy payout from a minnow in an industry dominated by the biggest names in the world such as Caterpillar and Komatsu. But for the JSE and the broader investment market the delisting, if it comes to pass, would slot into a delisting crisis gripping the exchange operator.
Smalltalkdaily analyst Anthony Clark mourned the loss of another mid-cap company from the bourse.
However, he said the offer was much more reasonable pricing compared to the last offer made three years ago, which was sternly condemned by many market shareholders and activist shareholders as “woefully inadequate” given the substantial discount to the net asset value, or the sum of its parts.
“The R53 share price is much fairer for the balance of the minorities,” said Clark. “Given that the family is the dominant shareholder owning just over 70%, they are the only buyer, I don’t see any other party coming in to try and bid a higher price because without the family’s backing, no deal is going to go ahead.”
Richards Bay-based Bell offers advance dump trucks, haulage tractors, tractor loader backhoes, front-end loaders, and sugar cane and timber-loading equipment through its nine marketing and support operations based outside SA, with more than 150 offshore distribution outlets and dealerships.
After 40 years of prosperous operation and expansion by group founder Irvine Bell, Bell Equipment made its JSE debut in 1995. Irvine’s son Gary Bell, sat at the helm for 34 years before retiring in May 2018. Grandson Ashley Bell took over as CEO after Leon Goosen resigned in July 2023.
Bell has been ramping up production of its flagship trucks in its German factory, saying this would increase efficiencies as the product would be closer to its main market and free up space in the SA factory to manufacture new product ranges.
IAB said for Bell to remain competitive and to adapt and grow in a competitive industry, it should be restructured to better position itself in the global arena and enhance its agility and flexibility in decision-making, which is not suited to the listed environment.
“IAB is of the view that Bell Equipment derives limited value from its listing, as the primary benefits of a listing including share liquidity and the ability to raise capital, are constrained,” it said. “The listing comes with significant costs, both quantitative and qualitative, which do not appear to be commensurate with the benefit derived therefrom.
“In the unlisted environment, the board and management of the company will be able to take a longer-term view in its approach to managing the company and its business undertakings, particularly where certain strategic decisions are necessary which are unlikely to yield positive short-term financial results.”
For the year to end-December 2023, Bell reported a two-thirds jump in annual profit boosted by unprecedented global demand for equipment in most markets, a positive commodity cycle and infrastructure spending abroad.
In addition to its shareholding in Bell Equipment, IAB holds a non-controlling minority 25% stake in asset-based finance provider Loinette Capital.
Correction: July 15 2024
This article has been corrected.
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.