Old Mutual’s private equity arm has upped its offer by nearly 7% to R6.20 a share for Long4Life, the investment company founded by entrepreneur Brian Joffe, it announced when publicising its final offer and terms of the deal.
The offer is worth a little more than R4.4bn, which is about 10% above Long4Life’s market cap at Monday’s market close.
In terms of the deal, which already has the support of 14% of shareholders including Joffe and the Long4Life management team, Long4Life will delist from the JSE, joining a growing number of companies leaving the local bourse.
The previous offer of R5.80 raised eyebrows, as it was below the net asset value of R7.27, reflecting the value of the underlying assets.
Long4Life owns Sorbet beauty salons, retailers Sportmans and Outdoor Warehouse and a step-down posthospital facility. It has traded much lower than the value of the net asset per share that reflects the underlying value of the different businesses.
Joffe, who built Bidvest into an industrial conglomerate worth R250bn that employs 150,000 people, had long pointed out that the second investment company traded at a discount.
Despite Joffe’s name and famed deal-making abilities, Long4Life’s share price has reflected the lack of institutional interest in small-cap companies on the JSE, as well as SA investors’ disdain for holding companies. The undervalued company, listed in 2017, made it hard to raise sufficient capital to expand and buy up companies.
Joffe announced he had hired Investec to do a strategic review of the company in April to determine how to unlock value.
The price in Old Mutual Private Equity’s binding offer is 59.% higher than the closing price of R3.90 a share on the day before the review was announced.
The price is also 43.9% higher than the 30-day volume-weighted average share price until October 13, the day before Long4Life told the market it had received an unsolicited expression of interest in the business.
Old Mutual’s private equity arm said it sees potential in the “sizeable portfolio of attractive, diversified and leading lifestyle assets, which are led by strong management teams”. The company also owns beverage companies such as Inhle and Chill, the latter known for its Fitch & Leedes mixer.
Long4Life’s share price rose 1.73% to R5.78 on the news.
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