Bidvest has an exceptional record when it comes to making acquisitions, dating back to its very first – Chipkins – in 1989. Not that Bidvest chief executive Brian Joffe was ever prepared to pay 1c more than he reckoned he could get away with, and not that Joffe was the easiest person to do a deal with.
But almost all of the time, a deal was done; and when a deal was done, it turned out to be good for the acquired shareholders as well as for the Bidvest shareholders. In addition, it was also generally good for the employees of the acquired company.
So the tone of the unsolicited letter sent by Bidvest to Adcock Ingram on the evening of March 21, a pubic holiday, may have taken Bidvest followers by surprise.
Assuming there is no history between Bidvest and Adcock Ingram, it is difficult to understand why the letter should have been quite so hostile. Whatever the circumstances, it would seem advisable to “make nice” with people, in this instance the independent members of the board, whose support you want.
While Adcock Ingram’s legal and prudential concerns can easily be dealt with, the abrupt tone of the letter, including the five-day response deadline and the plan to revise downward the purchase consideration, it suggests that there are more than legal and prudential issues involved.
At this stage, ahead of any comment from Bidvest and on the basis of Adcock Ingram’s account, it is difficult to understand why Bidvest didn’t go through the traditional pleasantries. This would involve the two sets of top executives, with lawyers in toe, haggling in a sometimes friendly manner until they reached a price and the outline of a deal. Then there might be some tentative approach to major shareholders to ensure it would fly before being launched in the public arena. page 17
SAA
Public Enterprises Minister Malusi Gigaba had received a “long-term turn-around strategy” from the SAA board, his office reported yesterday afternoon.
Given the national airline’s “past inability to implement strategies”, the minister cautioned that “the same situation” should not occur “this time around”. However, he did not say that he had asked the board to meet the deadline – to produce the long term strategy – of the end of March.
Gigaba reported that the strategy aimed at addressing “operational and financial” challenges faced by the airline.
“Furthermore, it seeks to ensure that the state-owned national carrier is financially viable and even a profitable airline,” he said optimistically.
Noting that he had appointed a task team to develop the strategy, realising that any further government support for the SAA could not continue “without being informed by a long-term strategy”. The team, he reported, included senior executives from SAA, SA Express, Mango and senior Public Enterprise Department officials.
The strategy was to be reviewed by the shareholder, represented by Gigaba, his spokesman Mayihlome Tshwete said.
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The strategy looks into the mitigating measures to be put in place to ensure the biggest input costs for SAA, such as rising fuel prices don’t impact negatively on the balance sheet… and that any recapitalisation programme will sustain the airline both in the short term and long term,” said Tshwete.
In January it was reported that Finance Minister Pravin Gordhan and Gigaba had signed off a guarantee that allowed SAA to secure a R550 million bank facility. This was to cover fuel and other short-term commitments. It was reported that the loan had to be paid back within three months.
SAA was granted a R5 billion guarantee last year and has received about R13bn in guarantees in the democratic period.
Future bailouts will only be provided if they are part of a long-term vision, one supposes.
Retail
Growing up in Diepkloof there was only one big shopping centre – the Blackchain shopping centre, which had a Chicken Licken, a drycleaner and a few hardware stores.
A few years later, the township now has three large shopping centres which consist of big retailers such as Shoprite, Pick n Pay, Clicks and furniture retailers.
This is just one residential area of about 34 residential areas in Soweto.
According to Mark Souris, the managing director of property management company Periscopic, the South African retail sector has shown an average growth of 8 percent over the past eight years and was running the risk of saturation.
One could agree, in Soweto for example, there is Bara Mall, which is a few kilometres away from Maponya Mall and six kilometres away from Southgate Mall.
However, Souris also argues that the growth of the retail sector has made a significant contribution to the economy and job creation.
Moreover, improved modern infrastructure has assisted in the move of shopping malls from urban centres to townships and rural areas.
Adding to the growth is the rapid development of high-density housing, creating a need for increased retail development plus a strong emerging middle class.
As the suburban retail market becomes increasingly saturated, property developers have turned their attention to rural areas and townships.
National retailers such as Pick n Pay and Shoprite have previously said there was still retail space in metropolitan areas and have disagreed with the notion that there was saturation in these areas.
However, Souris insists that even though there were opportunities in these areas, townships will become saturated in time. He adds that township businesses operate on a different model, where retail takes place on a smaller scale through hawkers in close proximity to the shopping centres. I agree.
Edited by Peter DeIonno. With contributions from Ann Crotty, Donwald Pressly and Nompumelelo Magwaza.