Just when I thought nothing could raise my stress levels further, my dear daughter contrived to pass her learner’s licence. I immediately fell into circular-breathing exercises but my meditation was rudely interrupted by my wife’s sympathetic yet sharp exhortation to “man up”.
I came close to cracking when my son hit the road five years ago. Hours of playing Grand Theft Auto had left an indelible mark on Zac, whose over-zealousness manifested in bouts of abusive criticism of fellow road-users. I gave him a 15% chance of passing the driver’s licence test, which he duly sailed through. Sarah, on the other hand, is a petite, and thankfully polite, young woman. She’s unlikely to as much as scowl at another driver.
I honestly don’t think she can properly reach the foot pedals in my bakkie — the default manual-transmission vehicle in the household. Tearing through the narrow confines of Misty Cliffs should be heaps of fun, especially when the oblivious kite surfers and their ungainly equipment are sprawled in the road. You might see us tootling around the deep south over weekends. Look out for the black bakkie with a red “V” (rather than the requisite “L”) in the rear window. V for Valium.
It takes brass finials to dabble in what’s left of the JSE’s construction sector
Speaking of holding your nerve, I have been watching the share price of Murray & Roberts over the past few weeks with considerable interest. It takes brass finials to dabble in what’s left of the JSE’s construction sector. Still, the M&R share hit the 100c mark on July 20, and then slipped all the way down to 85c by July 28. At the time of writing M&R was at 88c, which gives the business a market value of just R378m. For an extra bit of context, readers might recall that M&R’s profit before tax was R368m in the half year to end-December 2018.
It was around that time that German conglomerate Aton was making a hostile play for M&R, which culminated in a R17 a share offer being dangled in front of shareholders. R17! I sheet you not!
Shareholders were dissuaded from this offer by estimates that M&R’s value was in the range of R20-R22 a share, and the competition authorities were not overjoyed by the proposed transaction either. It’s no use crying over spilt milk, but I wonder what Aton’s plans are for its much-depleted M&R stake.
The last M&R annual report showed Aton held 43.8%, which is today worth about R166m. That can’t mean terribly much in Aton’s life. When the original takeover bid was made, initially pitched at R15 a share, the inferred value of M&R was close to R7bn. Maybe it’s time for an opportunistic investor to approach Aton with a view to acquiring the controlling stake in M&R?
Now here’s a mischievous thought. What if rival firm Aveng made a bid for the Aton stake in M&R?
Now here’s a mischievous thought: what if M&R rival Aveng made a bid for the Aton stake? If Aveng could sell its Australian operation, McConnell Dowell, at a decent price then a takeover or merger with M&R could form an enlarged business with little or no debt and profitable focus points in South Africa.
Back in 2018 when a merger between M&R and Aveng was briefly on the cards, there was some enthusiasm for the idea. Both groups are very different beasts compared with five years ago — and the tattered state of the local construction industry might mean the competition authorities wouldn’t frown on a bulk-up transaction.
Speaking of diminished stakes, I thoroughly enjoyed reading the latest Hosken Consolidated Investments annual report. CEO Johnny Copelyn took a lot of trouble to discuss in depth some of the unlisted assets that have been giving more than a few investors sleepless nights in terms of finding appropriate valuations.
The major takeout for me was Copelyn’s contention that the (eventual) sale of the group’s stake in the Venus oil and gas discovery off the Namibian coast offers HCI the prospect — for the first time in its history — of paying off all its debt and having its own cash to invest. “This is the position which every successful holding company aims to achieve, and we believe it is finally within our reach.”
Exciting times, indeed. But it might be a tad disappointing to see that the anchor shareholder, the South African Clothing & Textile Workers Union (Sactwu), has further sold down its stake in HCI from 26% to 24.7%. It’s common knowledge that Sactwu bought out loss-making clothing manufacturing operations from HCI subsidiary Deneb some years ago. Presumably these are proving costly to run and might have needed additional capital. Sactwu spoke for 32.8% of HCI in 2017. I hope the union does not regret unpicking this valuable stake in years to come.
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