Eqstra offer is unfair and unreasonably low, Protech tells shareholders

Roy Cokayne

PROTECH Khuthele’s independent board has strongly recommended that its shareholders reject the unsolicited offer by leasing and capital equipment company Eqstra to buy the remaining 67.2 percent in Protech it does not already own.

The listed civil engineering firm said yesterday that the Eqstra offer undervalued it and was neither fair nor reasonable.

This follows the board receiving an independent expert opinion by PwC, which found that the terms and conditions of the Eqstra offer were unfair and unreasonable to Protech shareholders.

PwC based its assessment on an unadjusted Eqstra offer of 60c a share and concluded that the market value of a Protech share was between 79c and 88c.

Protech chief executive Antony Page said yesterday that the shareholders who took up Eqstra’s offer would not receive value out of the firm’s turnaround or the benefits of synergies from the involvement of Eqstra in the business, which would be a “double whammy” because Eqstra would be the recipient of that value.

Page advised Protech shareholders to “hang around a bit”, stressing that Eqstra needed 90 percent of the shareholding to delist the company.

He added that Protech would soon be in a position to put out its trading update for the year to February, which would offer some comfort to shareholders that the turnaround was taking place.

Protech would probably be ready to announce its annual results before Eqstra’s offer expired, he said.

“The evidence is quite stacked up of a turnaround and shareholders will get value if they stick in [stay invested]. I think they must definitely wait. PwC’s downside and upside share price range is on the conservative side,” he added.

Page stressed that Eqstra did not have the level of support some people believed it had because the support Eqstra quoted included the 33 percent it already owned and not just the remaining 67 percent shareholding in the company.

Eqstra chief executive Walter Hill was unavailable for comment. However, when Eqstra’s full and final offer was posted to Protech shareholders last month, Hill said the offer provided Protech shareholders with an attractive cash price.

“Our offer positions Protech to benefit from the synergies and economies of scale that can be achieved by sharing resources between Eqstra and Protech, for example in short-term plant rental, the development of infrastructure and smaller scale mining-related activity,” he said.

“Protech will be better positioned to compete for business and achieve optimal returns with Eqstra’s access to funding at more competitive rates.”

The proposed deal by Eqstra is valued at about R146 million. The offer is at a 40.7 percent premium to the 90-day volume-weighted average traded price of Protech shares on the JSE up to December 4 and is subject to certain conditions.

Eqstra owns 32.8 percent of Protech and has secured irrevocable undertakings in support of the offer for an additional 30.3 percent stake.

Eqstra remained unchanged at R6.50 yesterday and Protech jumped 7.69 percent to 56c.