Photo by Simphiwe Mbokazi

JOHANNESBURG - Group Five climbed the most in eighteen years in Johannesburg trading after Greenbay Properties offered to buy the South African construction company’s European operations for 1.6 billion rand ($120 million) in cash.

Group Five surged 43 percent to 13.15 rand by 10:17 a.m.,the biggest gain since August 1999, valuing the company at about 1.5 billion rand. Greenbay dropped 0.4 percent to 2.40 rand. The benchmark FTSE/JSE Africa All Share Index rose 0.6 percent, set for a record close.

Greenbay, an investor in property and infrastructure companies, is bidding for Group Five’s European concession stakes, Bulgarian assets and Intertoll Europe operations and maintenance contracts, Group Five said in a statement Monday.

The targeted assets “represent a fundamental portion” of its portfolio and the offer price “substantially undervalues” them, Group Five said in a “preliminary observation” on the proposal. “The deal will potentially unlock value in the concessions business,” Tinashe Kambadza, an equity analyst at Afrifocus
Securities in Johannesburg, said by phone.

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“The offer price of 1.6 billion is in excess of the total market cap of the entire business, so it would be likely that shareholders will approve the deal.”

Greenbay will be able to grow the Group Five assets because it can inject “sufficient capital” and use its operating experience in Europe, the company said in a separate statement.