Publications
Partners
Johannesburg - Bidvest Group is no longer considering listing its food service business in London, the conglomerate said on Monday, potentially disappointing investors who had hoped to benefit from the spin-off.
Bidvest had been looking to list the food service business in London, where a number of flotations have been pulled recently due to sliding equity markets and growing caution among investors about prospects for the global economy.
Bidvest [JSE:BVT], a sprawling company involved in businesses from shipping to mop sales, has long acknowledged the need to separate its food business from the rest of the group, saying the unit's true value was not reflected in its share price.
In September, Bidvest said it had hired Barclays and Investec to evaluate a potential listing of the unit, adding it would be increasingly difficult to fund an overseas acquisition for the business with a South African balance sheet.
However, the company said on Monday it was no longer considering the move.
"The board has concluded that the potential listing will not, in current circumstances, be in shareholders' best interest," Bidvest said in a regulatory statement on Monday, adding that its strategic review had identified other opportunities that will be pursued.
The food service business, Bidvest's biggest division and one that contributes more than half of the company's R183.6bn ($17bn) in sales, supplies pubs, restaurants and hotels in Europe, South America and Asia.
Bidvest chief executive Brian Joffe is known as one of South Africa's savviest dealmakers and has a long history of buying underperforming companies and turning them around by focusing on cash flow and streamlining operations.
Shares of Bidvest were down 3.56% at R292.57 by 11.45.
This is the second time Bidvest has balked at spinning off the unit and disappointing investors who had bet on a hefty pay-out from the move. It is reminiscent of 2011 when it rejected buy-out bids for the unit on the grounds they would not have benefitted shareholders.
"The market is obviously disappointed because this is the second time this has happened," said Reuben Beelders, a portfolio manager at Gryphon Asset Management in Cape Town, which owns Bidvest shares.
However, Beelders pointed to the long-term ability of Bidvest founder and chief executive Brian Joffe to create value for shareholders.
"Operationally, he can extract value where others don't. One can't argue with the value he has created over time."
Bidvest had been looking to list the food service business in London, where a number of flotations have been pulled recently due to sliding equity markets and growing caution among investors about prospects for the global economy.
Bidvest [JSE:BVT], a sprawling company involved in businesses from shipping to mop sales, has long acknowledged the need to separate its food business from the rest of the group, saying the unit's true value was not reflected in its share price.
In September, Bidvest said it had hired Barclays and Investec to evaluate a potential listing of the unit, adding it would be increasingly difficult to fund an overseas acquisition for the business with a South African balance sheet.
However, the company said on Monday it was no longer considering the move.
"The board has concluded that the potential listing will not, in current circumstances, be in shareholders' best interest," Bidvest said in a regulatory statement on Monday, adding that its strategic review had identified other opportunities that will be pursued.
The food service business, Bidvest's biggest division and one that contributes more than half of the company's R183.6bn ($17bn) in sales, supplies pubs, restaurants and hotels in Europe, South America and Asia.
Bidvest chief executive Brian Joffe is known as one of South Africa's savviest dealmakers and has a long history of buying underperforming companies and turning them around by focusing on cash flow and streamlining operations.
Shares of Bidvest were down 3.56% at R292.57 by 11.45.
This is the second time Bidvest has balked at spinning off the unit and disappointing investors who had bet on a hefty pay-out from the move. It is reminiscent of 2011 when it rejected buy-out bids for the unit on the grounds they would not have benefitted shareholders.
"The market is obviously disappointed because this is the second time this has happened," said Reuben Beelders, a portfolio manager at Gryphon Asset Management in Cape Town, which owns Bidvest shares.
However, Beelders pointed to the long-term ability of Bidvest founder and chief executive Brian Joffe to create value for shareholders.
"Operationally, he can extract value where others don't. One can't argue with the value he has created over time."
