CAPE TOWN - Afrimat has made a rival bid for Australian-listed Universal Coal, as part of its diversification strategy.
The local construction minerals and mining group’s R2.1billion offer came in at A$0.40 (R4) per share, which appears to trump Ata Resources' cash-offer bid for Universal at 35 to 36cents per share. Universal’s share price increased up to 14.7percent to 39c in Australia yesterday.
However, Ata has also offered a deferred payment for Universal shareholders equivalent to 43c a share, over a year, subject also to other terms.
Universal’s directors advised their shareholders yesterday to take no action until the directors had further considered the Afrimat offer.
Afrimat's directors said a due diligence exercise would need to be completed and various options to finance its offer were also being considered, which might affect the Afrimat share price.
Universal, which also supplies coal to Eskom, separately declared a A$0.02c a share dividend yesterday, following the strong 80percent increase in earnings before interest, tax, depreciation and amortisation of A$53.3million that it reported for the six months to end February 28.
Universal’s directors said they expect the strong performance to continue in the second half.
Afrimat’s share price closed 0.16percent higher at R30.55 on the JSE yesterday.
On Friday, the group said it expected headline earnings per share to be between 216.4c and 234.4c a share for the year to February 28, 2019. The results are scheduled to be published on May 23.
PSG Wealth portfolio manager Amelia Morgenrood said that in her view, the increase in earnings per share “is almost a miracle” in the current environment in South Africa, and she rated Afrimat as a top performer on the JSE.
“In the past three years the share price was pretty much going nowhere, just like the rest of our market. Investors were disappointed with the interim results for the six months to August 2018, at the time the share price dropped to R22.
“It has, however, recovered since then, gaining 35percent to trade at the all-time high reached in 2017, just over R30 per share,” she said.
“If you bought the share five years ago, your return would be 20percent on average per annum. Over a 10-year period, the average annual increase in share price was around 35percent a year,” she added.
The last set of results showed that the weak economic conditions took their toll, and the aggregates business declined.