Shares in South African tech group Comparex rallied 15% on Thursday on expectations institutions holding over a third of the company’s stock would force a board change and issue a special dividend.
Comparex screeched up more than one rand, or 15%, to hit a 805 cents high. At 0843 GMT it was up 75 cents, or 10,7%, at 775 cents, outperforming a 0,5% rise in the tech index.
On Wednesday, the company said that institutional shareholders holding more than 35% of Comparex had called for a special meeting to vote on the replacement of five non-executive directors and the chairman.
Those directors then issued a statement, saying the institutions were ”morally as well as legally obliged to make an offer to minority shareholders”.
”Assuming the new board is elected, the expectation is that it will use the R2,4-billion cash pile to pay a special dividend,” SCMB Securities analyst Dale Vice said, adding that he had an ”underperform” recommendation on the stock at these levels.
Barnard Jacobs Mellet analyst Craig Hackney said if the group paid out all available net cash as a special dividend, and after paying the secondary tax on companies, shareholders could get a special dividend of between 600 and 640 cents.
”However, it is not inconceivable that a new board, if elected, would decide to retain some cash to look after the European business,” Hackney said.
He said BJM had changed its recommendation to a short and long term ”speculative buy”, but cautioned that there were still plenty of uncertainty. He saw eight rand as a likely short-term ceiling.
Comparex hit a year low of 680 cents on Wednesday, off a 12-month high of 12 rand last August.
The institutional shareholders are Allan Gray Limited, Investec Asset Management and Sanlam Asset Management. – Reuters