Johannesburg - Jasco Electronics was in discussions to sell its 51 percent stake in Malesela Taihan Electric Cable (M-Tec) to business partner Taihan Electric Wire, the company said on Friday.
The sale, to South Korea-based Taihan Electric, which is a leader in Korean cable manufacture, if concluded successfully could have a material effect on the price of Jasco’s securities, the company said, adding in a trading update that continued underperformance of the unit was a reason for the disposal.
“M-Tec’s performance suffered in very difficult trading conditions that prevailed throughout the year in a market where the majority of competitors were similarly impacted by delays at Eskom and the marked slowdown in the construction and mining sectors,” Jasco, which is in a closed period until it publishes full-year results on September 18, said.
Jasco bought a 34 percent stake for R241.4 million in M-Tec from Community Investment Holding, Jasco’s black economic empowerment partner, in 2008. Three years later the firm increased its stake to become a de facto 51 percent shareholder.
In its 2012 annual report, Jasco said that it had placed M-Tec on a watchlist of subsidiaries whose progress it was monitoring closely.
Jasco jumped 7.5 percent to 86c by 10.50am on the JSE after announcing the disposal, before closing unchanged at 80c. It said it classified its investment in M-Tec as “held for sale” and had stopped equity accounting. - Business Report