DURBAN - ALLIED Electronics Corporation (Altron) crashed more than 70 percent on the JSE, wiping more than R7 billion off its market cap yesterday after it forged ahead with the demerger of Bytes Technology Group (Bytes UK) from its portfolio.
The information technology (IT) group announced in April this year that it was planning to spin off and list its Bytes UK business on the London Stock Exchange (LSM) and second listing on the JSE in a move that would result in its shareholders owning shares in both companies.
Altron chief executive Mteto Nyati said the rationale behind the demerger was to enable Bytes UK to operate in a more focused and efficient manner and allow it to achieve its strategic goals and unlock value for Altron ordinary shareholders in the long term.
Last week, Altron announced the price range for the offer and said it was set at 240 pence a share to 290p per Bytes Technology Group share, implying a market capitalisation on admission of between £573.9 million (about R11.58 bilion) and £692.3m on base offer size assumptions. It said that the offer price was set at the bottom and top of the price range respectively.
The spin off gained momentum when Altron entered into a share purchase agreement with Bytes Technology Group and its newly established subsidiary, Bytes Technology Holdco (Bytes Technology Holdco), in respect of the sale of all its shares in Bytes UK to Bytes Technology Holdco at the beginning of last month.
Peter Takaendesa, head of equities at Mergence Investment Managers, said Altron’s share price crash was a result of the impending demerger of Bytes UK from the group.
“Altron shares are trading excluding the entitlement to receive the Bytes UK assets distribution. This means any investor who purchases Altron shares from today (yesterday) onwards will not receive Bytes UK shares when they list on the LSE and JSE next week,” Takaendesa said.
Altron shares had been on the up since the beginning of the year, rising more than 50 percent until Friday.
In the year to end February, Bytes UK delivered a 66 percent increase in earnings before interest, tax, depreciation and amortisation (Ebitda) while the group’s overall Ebitda was up by 14 percent.
Takaendesa said: “Investors who bought Altron shares prior to today will receive their Bytes UK shares when they list or cash if they elect to cash out and if the offer price range set by Bytes Technology Group plc at 240p to 290p per Bytes Technology Group plc share can be sustained, then they have no reason to worry about the sharp decline in the Altron share price today.”
Altron closed 73.55 percent weaker at R9.15 on the JSE yesterday.