LONRHO and FS Africa say they have reached agreement in terms of a cash offer by FS Africa for the entire issued share capital of Lonrho, at 10.25p per share. The transaction values Lonrho at about £174.5m.
The parties say this is a premium of about 97.1% to the closing price of 5.2p per Lonrho share on May 14, or a premium of about 38.2% to the average closing price of 7.42p for the six months ended May 14.
The shares shot up 87.5% to 9.75p in early trading in London on Wednesday. Reuters quoted a London analyst as saying it was "a reasonable offer" that was similar to the company’s annual revenue.
The news agency also said FS Africa had received commitments from certain Lonrho directors and shareholders who represented about 18% of issued share capital to vote for the deal.
The British-based industrial group was focused solely on investments in Africa.
Reuters said the newly created investment vehicle FS Africa was controlled by Swiss billionaire Thomas Schmidheiny and investor Rainer-Marc Frey, its chairman.
Lonrho’s board said the best interests of shareholders were served by the offer. It said the group would benefit from being owned by parties that had experience in managing businesses in developing countries, including in Africa, and was committed to significant investment in its businesses in the long term.
The volatility in its financial results were due in part to certain businesses being at different stages of maturity in Africa’s emerging markets, Lonrho said. But FS Africa would facilitate further capital investment in its core agribusiness and logistics businesses, which focused on the agriculture and oil and gas sectors across the continent.
Lonrho chairman Frances Cook said on Wednesday the group had been rapidly growing its four strategic divisions aligned with economic growth in Africa’s agriculture and oil and gas sectors. It now operated in 18 countries on the continent.
"FS Africa recognises these achievements and wants to build on our well-established platform to further expand and invest in the business," she said.
In September 2012 David Lenigas stepped down as Lonrho executive chairman. Ms Cook, the company’s senior independent director, replaced him as nonexecutive chairman. Ms Cook had earlier served as the US ambassador to Burundi and Cameroon.
Reuters said FS Africa, which controlled 19.9% in Lonrho together with certain parties, was a consortium consisting of Mr Frey and BIH SA, owned by Mr Schmidheiny — who Forbes magazine said was the fourth-richest man in Switzerland in 2012.
Lonrho businesses range from agribusiness, and infrastructure to support services and hotels. It was the majority owner of FastJet and owner of seafood production company Oceanfresh Seafoods.
"We are pleased to receive a recommendation from the board of Lonrho and our cash offer should provide certainty to shareholders," Mr Frey said on Wednesday.
Mr Schmidheiny said Lonrho had "strong long-term prospects" but significant capital was required to grow the business.
In 1998 the assets of Lonrho were split into two publicly listed companies in London, Lonrho and Lonrho Africa. The former retained all the non-African businesses and mining assets, and in 1999, Lonrho plc was renamed as Lonmin plc as a focused mining company began. Lonrho Africa plc became Lonrho in May 2007.
In April South Africa’s Business Times said FastJet had a reputation for not paying its bills.
It was formed in June last year through the reverse listing of Lonrho’s aviation wing, Fly540, into a company called Rubicon.
The paper said London’s Daily Telegraph newspaper recently reported that nonpayment had prevented FastJet from completing its takeover of Fly540 Kenya.
Lonrho’s main listing is on the London Stock Exchange. It had a secondary listing on the JSE’s AltX and trades American Depository Receipts in the US, and bonds in Luxembourg.
The group said revenue in the first quarter of this year was £39.1m. On an adjusted like-for-like basis at constant currency levels, this had marginally increased by 0.3% year on year.
For the financial year ended December, Lonrho reported revenue from core operating divisions of £186.3m.
Net operating loss for the year from core operating divisions was £3.4m with a basic loss per share of 0.11p.
Net assets were £174.2m at this time, with net debt of £87.2m.
FS Africa had not traded since its incorporation, nor had it entered into any obligations other than in connection with the implementation of the acquisition.
Source :bdlive.co.za
