Roy Cokayne

LEASING and capital equipment company Eqstra put tight deadlines in its unsolicited bid to acquire the entire shareholding in listed civil engineering group Protech Khuthele in order to prevent long drawn-out negotiations and “push them into a corner”.

Eqstra chief executive Walter Hill said yesterday that this followed discussions with Protech since March over a non-binding expression of interest it had lodged. Eqstra said last month that it had reached an impasse with Protech.

However, Hill was optimistic the bid for Protech could still be concluded as a friendly rather than hostile transaction.

This is despite Protech failing to respond to an ultimatum set out by Eqstra in the firm intention letter sent on Friday that Protech must indicate by 5pm on Wednesday that it would support the proposed transaction or “Eqstra will proceed with a hostile offer”.

Eqstra has offered 60c a share for the shares in Protech it does not already own in a proposed deal valued at about R146 million. Eqstra holds a 32.8 percent stake in Protech.

The offer represents a premium of 40.7 percent to the 90-day volume-weighted average price of 43c and a premium of 39.5 percent based on the closing price of 43c on Tuesday.

Eqstra received irrevocable undertakings of support for the proposed deal from Protech’s empowerment partner, Protech Khuthele BEE, which owns 20.4 percent of Protech’s issued share capital, and four other shareholders. Together they own 28.9 percent of Protech.

Hill said this meant shareholders holding 45.1 percent of the remaining Protech shares had provided Eqstra with irrevocable undertakings to accept the offer.

Protech has established an independent board to consider the proposed transaction.

Hill said limited progress was made by the parties in the discussions up to last month, and Eqstra had not been allowed to conclude a due diligence to allow it to lodge a firm bid and formal binding offer.

If the offer proposal was not supported by Protech’s board, Eqstra had included a general offer directly to shareholders in terms of the Companies Act, which meant it had two ways of concluding the proposed transaction, he said.

Protech was attractive to Eqstra for a number of reasons, including that it would like to be able to bring certain work, such as access roads and other rudimentary construction, of its contract mining business in-house, Hill said.

Eqstra fell 3.28 percent to R5.90 yesterday. Protech gained 5.66 percent to 56c