Old Mutual Private Equity (OMPE) on Friday made a more than R3.7 billion cash offer to acquire all of the shares in Long4Life, the owner of Sportsmans Warehouse and Sorbet stores.
Long4Life’s share price increased 1.34 percent to R5.30 by late Friday afternoon, giving it a R3.7 billion market capitalisation.The share later closed 2.29 percent higher at R5.35. OMPE, however, pitched its cash offer at R5.80 per share, which is 9.4 percent more than Friday’s share price.
OMPE did a due diligence investigation into Long4Life prior to submitting its proposal, a statement said on Friday. Long4Life’s share price rose on Friday after the first details of the potential deal were released, this following some market speculation about a possible overture from OMPE a month ago.
Long4Life’s board of directors had constituted an independent board comprising Graham Dempster, Lionel Jacobs, Tasneem Abdool-Samad and Keneilwe Moloko to consider the proposed transaction.
Long4Life is a lifestyle-focused company founded by well-known South African entrepreneur Brian Joffe.
The stock has not made any gains since an initial public offering in 2017, but the price is up 57.1 percent year-to-date.
Joffe built industrial conglomerate Bidvest Group through a series of acquisitions over three decades. He stepped down after spinning off food-delivery firm Bidcorp in 2016. He is due to step down as chief executive from Long4Life in 2022, moving to the role of chairman.
A successful deal will fit with Old Mutual’s interest in the retail sector. The buyout firm’s holding company Private Equity Fund IV has investments that include shoe chain Footgear and sports companies The Pro Shop and Cycle Lab.
Last month, Long4Life posted headline earnings of R143.1 million for its interim period, which translated into headline earnings per share (Heps) of 22.5c.
Heps were up 2 713% from the 0.8c reported for the six months to August 31, 2020, and 55 percent higher than the Heps of 14.5c reported for the six months ended August 31, 2019.
Revenue of R1.8bn was in line with that of the comparable period in 2019, and 30 percent higher than the R1.4bn in revenue reported for the comparable period in 2020.
Operating cash flows of R288m were generated through the six-month period and the balance sheet remained solid, with a cash balance of R667m as at August 31.
Long4Life said at the time it remained cautiously optimistic about prospects for the remainder of the financial year and its directors were confident of the group’s ability to execute its strategy.
BUSINESS REPORT ONLINE