Roy Cokayne
Listed civil engineering group Protech Khuthele appears to have thrown an olive branch to Eqstra over the listed leasing and capital equipment firm’s unsolicited “hostile” bid to acquire the entire shareholding in Protech it does not already own.
Anthony Page, Protech’s chief executive, said yesterday it had formally responded in writing to Eqstra indicating it was quite happy and willing to engage with the firm regarding the proposed transaction.
This is in stark contrast to Protech’s initial response last week to Eqstra’s bid, where it described the time limits in its offer as “unreasonable”.
Page said Protech found the tone of the firm intention letter from Eqstra hostile and aggressive because of the tight deadlines imposed on Protech.
It gave Protech’s independent board three business days to respond to the letter and support the proposed transaction or Eqstra would proceed with a hostile offer.
Page said Eqstra’s firm intention letter was unexpected despite the two firms having discussions earlier in the year about a non-binding bid submitted by Eqstra.
“We did have some engagement with Eqstra earlier in the year and it resulted in us issuing a cautionary. Our advisers did have some discussions with Eqstra but the process dried up.
“We never received a formal offer,” he said.
Walter Hill, Eqstra’s chief executive, told Business Report last week that it had put tight deadlines in its unsolicited bid to acquire Protech to prevent long protracted negotiations and “push them into a corner” after discussions since March this year over its non-binding expression of interest had reached an impasse last month.
However, Hill was optimistic Eqstra’s bid could still be concluded as a friendly rather than hostile transaction.
Eqstra has offered 60c a share for the shares in Protech it does not already own in a proposed transaction valued at about R146 million. Eqstra currently holds a 32.8 percent stake in Protech.
When the bid was made, the 60c a share offer price represented a premium of 40.7 percent to the 90-day volume-weighted average price of 43c.
Eqstra has received irrevocable undertakings of support for the proposed transaction from Protech’s empowerment partner, Protech Khuthele BEE, which owns 20.4 percent of Protech’s issued share capital, and four other shareholders.
Together these entities own 28.9 percent of Protech, which means shareholders holding 45.1 percent of the remaining Protech shares have provided Eqstra with irrevocable undertakings to accept the offer.
Protech reported yesterday that it had appointed PwC Corporate Finance as the independent professional expert to advise its independent board on whether the terms and conditions of the proposed transaction were fair and reasonable.
Page said Protech expected to receive this opinion by the middle to end of next month.
If the proposed transaction was fair and reasonable and would unlock value for shareholders, he could not “see why the board would not support it”, he said.
He said Protech was in the advanced stage of a turnaround process.
“Some of the bigger concerns are for the people in the business and to make sure they are adequately looked after and make sure shareholders get the correct value because we are in the advanced stage of a turnaround process,” he said.
Page said Protech had a total of about 1 600 employees, of whom between 300 and 400 were monthly paid.
Protech shares fell 1.82 percent to 54c yesterday. Eqstra lost 3.73 percent to R5.68.