Struggling DAWN mulls buyout bid

The company receives a buyout offer that would take it private.

Distribution and Warehousing Network (DAWN) said on Monday that it has received a buyout offer as the struggling company battles to deal with tough trading conditions stemming from South Africa’s economic difficulties.

The company, which makes hardware, sanitary ware, plumbing, kitchen and engineering products, said it has received a buyout offer from a South African company, whose share capital is owned by Derek Austin Tod and Luis Gonsalves Baeta.

Luis personally holds 10 056 shares directly in DAWN, representing 0.0017 percent of the ordinary share capital of DAWN excluding treasury shares. Meanwhile, Derek holds 10 857 862 shares in DAWN, directly or indirectly representing 1.85 percent of the ordinary share capital of DAWN excluding treasury shares.

DAWN said the amount payable in terms of the buyout offer will be a cash consideration of R0.01 per Share – valuing the offer at more than R6 million. The value of the offer is below DAWN’s share price of R0.02 per share on Monday at 16:35.

A successful buyout of DAWN means that the company will be taken private as it will delist from the JSE.

In explaining the rationale of the buyout offer, DAWN said it faces liquidity constraints despite progress on its turnaround strategy and consideration of funding alternatives.

The turnaround strategy and cost-saving plan of DAWN, which operates in South Africa and some other African countries, included job cuts and lowering its spending on support services and infrastructure. The company was pushed to sell its underperforming assets and cut executive pay.

“The board of directors of DAWN is of the opinion that the offer is the most viable alternative,” the company said in a statement.

The company has set up an independent board to consider the buy out offer, which is still subject to shareholder approval.

The independent board has appointed BDO Corporate Finance as the independent expert to express an opinion on whether the offer is fair and reasonable to DAWN Shareholders.