Top deals making headlines this week

In focus this week: Investec, Cell C, African Phoenix, Choppies and more. 

Cell C

South Africa’s third-largest mobile operator Cell C has rejected a takeover offer from Telkom. Telkom announced on Friday that the offer was rejected by Cell C’s board of directors, adding that it continued to believe the offer was “a compelling proposition that would have created significant value for all stakeholders including Telkom’s shareholders.”

“The Telkom board continues to believe the offer is a compelling proposition that would have created significant value for all stakeholders including Telkom’s shareholders,” it said.

“As the offer has been rejected by Cell C’s board of directors, Telkom shareholders are advised that they are no longer required to exercise caution when dealing in Telkom securities.” Read more here.

African Phoenix 

South Africa-based African Phoenix Investments, which rose out of the ashes of African Bank Investments Limited, is considering a merger with new shareholder, financial services group Zarclear.

African Phoenix would acquire the entire share capital of Zarclear, in an exchange determined by the ratio between the net asset values of the two companies, the parties said on Tuesday.

Zarclear had a net asset value (assets minus liabilities) of 536 cents as of the end of September, trading at a discount of 20 percent on Tuesday, giving it a market value of R970 million. African Phoenix had a net asset value of 94 cents as of the end of June, trading at 23.4 percent discount on Tuesday, when its market value stood at R1.02 billion. Read more here

Choppies

Botswana-headquartered food retailer Choppies has sold its stores and distribution centres in South Africa to King Investments for R1, the company announced on Tuesday.

The company, which has a primary listing on the Botswana Stock Exchange and a secondary listing on the Johannesburg Stock Exchange, said its South Africa-based businesses have been trading at a “substantial loss for the last two years”.

The losses were worsened by the “lack of cash flow (that) resulted in trade creditor suppliers not being paid on their applicable due date and hence refusing to supply stock, causing stores in South Africa to become understocked and lose market share.” Read more here

Investec

Financial services group Investec will sell about 10 percent of its asset management business, to be renamed Ninety One, when it is spun off as part of a demerger expected in March. Investec is led by Fani Titi (pictured)

Investec announced the structural overhaul last year in a move intended to strengthen the asset management business and Investec’s remaining banking and wealth operations.  In an update published on Friday, Investec said it plans to sell about 10 percent of Ninety One, which will be split between London and Johannesburg under a dual-listing. 

Following the transaction, Investec expects about 55 percent of Ninety One to be held by existing shareholders, with 15 percent being retained by Investec and 20 percent being held by Forty Two Point, the investment vehicle through which the management and directors participate in the business.  Read more here.

Arqaam Capital 

Arqaam Capital, the Dubai-based investment bank focusing on emerging markets, is closing its South African office, according to Bloomberg.

The company, which opened an office in Johannesburg in 2014, said in a note to clients on Monday that it was ceasing research coverage in South Africa. Clients haven’t yet been informed that the office, which employs about 17 people, is closing, a source told Bloomberg, declining to be identified because an official notification on that hasn’t been sent out.

Arqaam’s closing follows an announcement by Macquarie Group in October that it’s shutting its cash-equities business in South Africa this year and a significant reduction in the South African staffing of Deutsche Bank AGCredit Suisse Group AG reduced its presence in the country last year. Read more here

Capital & Counties 

Real estate company Capital & Counties Properties on Monday said it has completed the sale of its interest in Earls Court, London, and now expects to convert to UK real estate investment trust status before the end of 2019. 

Capital & Counties Properties, which was spun out of SA businessman Donald Gordon’s Liberty International in 2010, is listed on the Johannesburg Stock Exchange.  In mid-November, the FTSE 250-listed property investment & development company had agreed to sell its interests in Earls Court to APG and Delancey for £425 million. Read more here

Curro

Curro, which operates private schools and colleges in South Africa, says it has acquired three new schools in Gauteng as part of its plan to increase its geographical footprint in South Africa’s wealthiest province.

“Although these acquisitions may not be material, they are strategic from a footprint and/or operational perspective,” the group said in a statement on Tuesday.  The company acquired King’s School Linbro Park in Sandton, and two nursery schools known as Land of Oz, from two-different vendors. King’s School, which has 390 enrolled pupils, is to be expanded to about 1,290, it said. Read more here.