Finweek English Edition – August 15, 2019

@finweek finweek finweekmagazine finweek^ 15 August 2019^37

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MONDI LTD

No more LTD

Mondi Ltd has disappeared from the JSE

as it has effectively been taken over by

Mondi PLC. This dual structure came into

effect when then finance minister Trevor

Manuel was concerned by the rush of

locally listed stocks wanting to move their

primary listings offshore. So, instead, we

got a dual listing of the local and offshore

companies, with both having equal

claims to the profits of the business. In a

sense it worked, but it did always seem

an odd solution. Local LTD shareholders

now have PLC shares with exactly the

same economic rights. Investec is the

other stock with a similar structure, and I

suspect that after they’ve completed the

unbundling of their asset management

business, they will also move to simplify

their dual LTD and PLC structure.

The Murray & Roberts

share price has fallen

over 13% to under

1 200c on the news,

leaving shareholders

badly in the lurch,

especially Aton, who

hold some 44%.

PIONEER FOODS

PepsiCo bid for

Pioneer a plus

The other big merger deal was PepsiCo

announcing a R110 per share offer for all

listed shares in Pioneer Foods. This is a

chunky premium to the price, albeit still well

off the +R200 share price of 2015. The big

winner here will likely be Zeder, which holds

over 25% of Pioneer, although they paid

just under R100 for the shares, so not a

great return. But they have in a sense been

tainted by that holding as their other assets

are not considered when pricing the share.

This windfall of some R6bn for Zeder could

clear debt of around R1.5bn, pay a special

dividend, and make them a much more

interesting niche agriculture player in the

local market. ■

[email protected]

*The writer owns shares in Shoprite.

** finweek is a Media24, subsidiary of Naspers, publication.

Aton deal gets

blocked

The Competition Commission has

recommended to the Competition Tribunal

that Aton's proposed takeover of Murray &

Roberts be prohibited, probably bringing

an end to this drawn-out process. The

Murray & Roberts share price has fallen

over 13% to under 1 200c on the news,

leaving shareholders badly in the lurch,

especially Aton, who holds some 44%. I

had expected the deal to close. Aton can

state its case before the tribunal, but the

finding is around the combined companies

having too much power as it “will, for

both parties, result in the removal of their

closest and strongest competitor”. This is a

very hard hurdle to overcome, as opposed

to, for example, quelling concerns about

job losses, which can be mitigated with

promises of no retrenchments for a period

of time. So, Murray & Roberts is likely to

remain listed and management now has to

get the business going, and the share price

to the 2 200c-level they state is fair value.

MURRAY & ROBERTS INTU PROPERTIES

Brexit burden

looms

Intu’s half-year results for the year ending

30 June were a disaster. Income has fallen

as retailers in the UK are being squeezed, in

turn squeezing landlords. This will of course

be worsened by Brexit, which new Prime

Minister Boris Johnson insists will happen by

31 October, regardless of a deal with the EU or

not. Johnson and his Tory hardliners can spin it

anyway they like, but there are two undeniable

truths here. Firstly, trade blocks such as the EU

are good for capitalism and as such good for

a country’s economy. Secondly, a hard Brexit

without a deal will be an absolute disaster.

The struggle to

attract listings

The JSE’s interim results released on

30 July weren’t great. Costs rose on the

back of increased development costs as they

roll out new, improved services. Coupled with

weak volumes, it hurt profits. With Naspers**

listing Prosus in Amsterdam in September,

volumes will drop even further, hurting this

largely fixed-cost business even more. JSE

CEO Nicky Newton-King also announced her

retirement after eight years at the helm, and

I think she’s done a great job, with only one

potential criticism. New listings, especially

of a decent size, have all but disappeared as

the JSE continues to shrink. This is a tough

battle to win since the real competition for

the JSE is not the new local exchanges, but

rather global established exchanges. These

days capital can list wherever it likes and

the JSE seems to have been caught on the

back foot. That said, and in their defence, the

political and economic conditions over the

last decade have not made it easy to attract

listings.

JSE