JSE-listed heavy equipment maker Bell Equipment confirmed Tuesday that the minority shareholders’ purchase proposal by the company’s founding family trust has failed.
The announcement has been hailed as a victory for minority shareholders and corporate governance.
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Richard Bay-based Bell Equipment said the independent board appointed to consider the proposed transaction has decided that it will not recommend the deal and offer to buy scheme of IA Bell, the Bell family holding company and Bell Equipment’s largest shareholder, eligible minority shareholders. .
The company said the fair and reasonable opinion issued by the independent expert appointed by the independent board “did not confirm that the consideration of the scheme is fair and reasonable” as required by a condition of the scheme.
In terms of IA Bell’s proposed scheme, he planned to make a firm offer to acquire all the issued shares in Bell Equipment that he did not yet own for R10 per share and then delist the company.
Bell Equipment had a net asset value per share of R37.79 at the end of June 2021, its most recent financial results.
Bell Equipment shares fell 2.62% to R12.64 per share on Tuesday in about an hour after the announcement was made, but closed marginally higher during the day at R13 per share.
The company’s shares plunged 13.23% to close at R12.92 on October 22, the day that Bell Equipment announced that IA Bell had notified its firm intention to make the offer through an agreement scheme, but it had stuck to its initial indicative offering price of R10 per share.
Read: Plan to buy Bell Equipment minorities at R10 per share, a futile exercise?
Despite the stock price drop on October 22, the closing price for that day was still 29% higher than the proposed offer price.
The offer price of R10 per share provoked the ire of minority shareholders, who said it undervalued the company.
Carson Mitchell, a managing member of Shipyard Capital Management LLC, who previously indicated that he controlled 1.2 million shares in Bell Equipment, said Tuesday that the decision is “a victory for minority shareholders and a victory for South African corporate governance.”
“The regulatory process worked the way it was supposed to: the independent expert declared the offer unfair and unreasonable, as did Bell’s independent board.
“And all this despite the fact that the Bell family controlled the board of directors and had selected the independent expert,” he said.
Mitchell said shareholders now have the opportunity to participate in their stock enhancement, and Bell Equipment president Gary Bell pointed out just a year ago that the stock should be worth R36 per share or more.
“This has been a long struggle and it is gratifying that it has been a happy one for shareholders,” he added.
Scheme ‘has failed’
Bell Equipment said Tuesday that IA Bell had decided not to increase the consideration of the scheme and confirmed to the independent board that it will not submit any increase in the consideration of the scheme before December 2, 2021, the last date for the fulfillment of this condition of the scheme.
He added that: “Since the consideration of the scheme will not be increased, the independent expert will not review the fair and reasonable opinion.”
The company said that this condition of the scheme cannot be met and that the scheme “has therefore failed.”
Bell Equipment said that the independent board formed its own opinion on the consideration of the scheme after taking cognizance of the fair and reasonable opinion issued by the independent expert, as the independent board is required to do in terms of the Procurement Regulations, said.
IA Bell owns 70.1% of the issued share capital of Bell Equipment.
This follows IA Bell’s acquisition of 30 million Bell Equipment shares at R10 per share of John Deere Construction & Forestry Company effective September 28, 2021.
IA Bell was unable to obtain irrevocable commitments from any of Bell Equipment’s major minority shareholders to support the proposed transaction.
Sanlam Investments and Allan Gray, two institutional investors who own and / or control about 8.6% of Bell Equipment’s issued share capital, previously confirmed to Moneyweb that they would vote against the proposed offering, while Ninety One declined to disclose. how would you vote.
In terms of the proposed arrangement scheme, only the owners of 29.45% of the shares not yet owned by IA Bell or certain shareholders who were related to or known to the founders of Bell Equipment would have been able to vote on the proposed scheme. .