Oh dear. Just as it looked as though the controversial and complicated bid to acquire Barloworld had picked up speed and was heading to the finishing line at a smooth gallop, a major unexpected hurdle has sprung up.
It’s a hurdle that could add about R175m to the acquisition bill to be paid by the Newco consortium behind the Barloworld takeover.
Anyone who tracked the share price after last week’s announcement that the deal had become wholly unconditional will not be surprised. The share has been trading at above R119 since the announcement. This didn’t seem to make sense given the contents of the press release issued by the Newco consortium on October 2 confirming its offer had become wholly unconditional.
That press release reminded shareholders that Barloworld had paid an interim dividend of R1.20 on June 24, “resulting in a net amount of R118.80 per share being payable in accordance with the terms of the standby offer”.
For the share price to justify trading above R118.80 could only mean shareholders were holding out in the expectation that, led by disaffected UK-based shareholder Silchester International Investors, there would be a higher offer several months down the track.
Or, that Newco had made an error and is obliged to stick with the original R120-a-share payment.
An error it may well be.
Each of the four press releases issued since August 18 has made mention of a R1.20-a-share dividend and the resulting reduction in the offer price to R118.80 a share. However, none of the accompanying Sens statements made any reference to either the dividend or the reduced offer price.
Even back in May, when the R1.20-a-share dividend was declared, there was no reference to the offer price being reduced.
A R175m cost
Newco thinks the absence of reference to the dividend-related cut in anything other than its press releases is irrelevant. A spokesperson for the consortium confirmed on Friday that R118.80 was the amount shareholders would be getting.
“The reduction to the price since the declaration of the dividend in May 2025 has been articulated to the market in all press releases published in connection with the offer since then,” the spokesperson told Currency, adding that the press releases had been approved by the Takeover Regulation Panel.
But that’s not how a lot of Barloworld shareholders see things. Shareholders who have engaged with Currency say that once the offer has been made – by way of a circular to shareholders – it cannot be changed. And it certainly cannot be changed by merely stating it in a press release.
As one fund manager points out, the circular did provide for a variation in the original scheme offer by the amount of any dividend paid. But the scheme offer was rejected by shareholders back in February at which time the standby offer came into effect.
And it doesn’t look as though there was any provision for a dividend-related deduction from the standby offer.
Paying the “extra” R1.20 a share for the approximate 77% Newco does not own will cost just over R175m. That might be just enough money to persuade Newco’s lawyers it’s worth a fight with shareholders and the Takeover Regulation Panel, which has still to give its stamp of approval to the deal.
Or they may see the advantage of tying up an already messy deal as quickly as possible, handing over the money and moving on.
On Sunday afternoon Newco’s spokesperson told Currency, rather enigmatically: “There will be a clarification announcement issued on this.”
Whatever happens this won’t go down as one of the more elegantly handled transactions the JSE has seen.
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