DP World’s offer to buy Imperial Logistics falls short

Johannesburg – DP World’s plan to buy South Africa’s Imperial Logistics for R12.7-billion faces a major hurdle after one of Imperial’s biggest shareholders, PSG Asset Management, said the offer did not represent a fair value for the business.

The Dubai-based company in July announced its offer to buy Imperial. The transaction is subject to Imperial’s shareholder approval and other regulatory approvals.

PSG holds a 7.5% stake in Imperial and is its fourth-largest shareholder. PSG fund manager Justin Floor said it hoped other shareholders would agree with its position that DP World’s off er was too low.

“The current offer doesn’t adequately reflect the scarce nature of Imperial’s assets, in particular those in the rest of Africa. Notably, comparable global assets are valued by public and private markets at significantly higher valuations, including some of Imperial’s own recent purchases such as Pallet ways in the UK,” Floor said.

“Recent asset disposals have also created excess capital, which is only now being deployed into attractive areas, after the offer was made. This means the offer does not take these developments into account, and that shareholders won’t be adequately compensated for the potential on offer, if the vote carries.”

Imperial Logistics has operations in 25 countries, mainly in Africa and Europe. In its announcement, DP World said its offer represented a premium of 39.5% to the Imperial share price as of July 7 2021 on the JSE.

Imperial had a market capitalisation of just over R12.7-billion on Friday. The company’s biggest shareholder is the Public Investment Corporation (PIC) with 11.3% of the company’s stock.

PIC spokesperson Sekgoela Sekgoela could not be drawn to reveal whether Africa’s largest asset manager was in support of the deal.

“The PIC has noted the announcement by Imperial Logistics that it has entered into a transaction implementation agreement with DP World in terms of which DP World intends to acquire all of the issued ordinary shares in Imperial Logistics.

“The PIC is studying the terms of the circular and undergoing our internal processes to consider the offer.”

Imperial’s second-biggest shareholder M&G Investments did not respond to questions, while the company’s third-biggest shareholder Ukhamba Holdings with 8.25% supports the offer.

Ukhamba chairperson Veli Mokoena said DP World’s offer was appealing.

“The Ukhamba board supports the offer, which will provide its A and B shareholders with an opportunity for earlier exit of the Imperial investment, and at a premium, instead of at the end of June 2025, which would otherwise be the case in terms of the existing structure of Ukhamba,” he said.

Ukhamba, which is the black economic empowerment shareholder of Imperial, first invested in the company in 2004 when it acquired 10.1% (valued at R2.8-billion at the time) of Imperial.

Floor said shareholders must vote with care. “Our responsibility as responsible and patient custodians of our client’s investments require us to exercise our duty in the upcoming vote with the above considerations in mind.

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