Johannesburg - Venter family holding company Altron will consolidate its triple entry points into a single one, buying out the minorities of subsidiaries Altech and Bytes for roughly R4.8bn in an all-share deal.
The news ends the group's fascinating treble cautionary tale, which started on 8 August, and led to much speculation around what the corporate action could entail. Most market participants believed such a consolidation could be on the cards.
Group CEO Robbie Venter said this was the culmination of a strategic objective to simplify the group structure, which started back in 2001.
Altron has been reduced from nine entry points through a series of delistings and minority buy-outs. Some delistings have included Fintech, Autopage and most recently Powertech.
Altech currently owns all but 38.2% of Altech and 42.3% of Bytes.
The new structure would allow a more efficient capital allocation, providing additional flexibility for both internal and external investment decisions, Venter told a conference call with journalists this afternoon.
Most of Altron's large cash pile - R1.2bn of the R1.8bn at the half year - sits at the Altech level, but it cannot access this for any purposes other than Altech pursuing growth opportunities if need be, because Altech has minority shareholders as well.
Venter said it had decided to issue shares to minorities rather than pay out the cash, because it believed it could put this to better use in terms of growth opportunities that the group has.
Another advantage is that the shares won't incur capital gains tax, whereas the cash would have.
Another reason for consolidating the group, Venter said, is that Altech and Bytes could work more closely on opportunities such as tenders, particularly in the light of the convergence happening in the IT and telecoms sectors.
But, Venter said both Altech and Bytes would continue to operate as separate companies, Altech under his brother Craig Venter and Bytes under David Redshaw. They would also retain their branding. Venter said neither was there any reason to swap some assets from one subsidiary to the next at this stage. However, if the rationale for doing so arose down the line, it would have the flexibility to do so.
Altron said the offers to both Altech and Bytes shareholders represented a premium of 29% on their 30-day volume weighted average price before the cautionary were released.
Venter said Altron had had the opportunity to canvass key institutional shareholders, and had a "somewhat positive response" from them: "We believe it is a good premium and we think they will agree," he said. CFO Diane Radley agreed.
Both Altech and Bytes shareholders would have a choice to take up either all Altron participating preference (PPs) shares at the respective swap ratio determined for each, or a combination of PPs and ordinary shares. If they elect to take up the combined option, they'll be able to take up to 100% more of the ordinary shares if not all the minorities go for the part-ordinary share option.
The swap ratios are as follows:
- All PP offer: 1,71561 for every 1 Altech share
- 85% PPs at 1,71561 for every 1 Altech and 15% ordinary shares at 1,60337 for every 1 Altech.
- All PP offer: 0,43565 for every 1 Bytes
- 85% PPs at 0,43565 for every 1 Bytes and 15% ordinary shares at 0,40715 for every 1 Bytes
Nedbank Capital said the offer to Altech minorities was fair and reasonable, while Rand Merchant Bank evaluated the offer to Bytes minorities and advised the same.
The PPs have lower voting rights, but a higher dividend yield than the ordinary shares.
Altron said it would restructure the group into two broad segments; power electronics (Powertech) and telecoms, multimedia and IT (Altech and Bytes).