The board of directors of fashion retail group Edcon on Monday announced it had received more than the requisite 75% shareholder approval for the Bain Capital proposal to acquire the entire ordinary share capital of the company at R46 per share.
The board had recommended the offer to shareholders on February 8 this year following a global auction process. The value of the proposal represents a premium of 51,3% over the closing share price the day before the company announced it was in discussions with interested private equity parties, and values Edcon at R25-billion.
“We’re pleased that the shareholders of Edcon overwhelmingly voted in favour of this transaction, allowing them to realise substantial value from their investment,” commented Edcon non-executive chairperson Selwyn MacFarlane.
“We see this as an historic endorsement of the soundness of South Africa’s economy and international standing. We believe Bain Capital has both the commitment and experience to help propel Edcon to new heights.
“Most importantly, we believe their pledge to continue our commitment to broad-based black economic empowerment by replicating the benefits of our staff empowerment trust and supporting our focus on skills and leadership development programmes will help to ensure that Edcon remains South Africa’s leading retailer,” he concluded.
Dwight Poler, an MD of Bain Capital, said: “We are delighted to have received shareholder approval for the transaction. We look forward to working as part of the South African business community with the management and employees of Edcon to enhance the company’s leading market position.”
The transaction remains subject to the fulfilment of certain conditions precedent detailed in the circular issued March 16 this year, including court sanction of the scheme and approval by the competition authorities and the South African Reserve Bank.
Concerns that the vote could go down to the wire because of opposition to the deal by the Public Investment Corporation and at least three other institutional investors who felt the bid was undervalued saw the rand weaken sharply on Friday.
One of those opposing the deal was Templeton Asset Management, which laid a complaint with the Securities Regulation Panel (SRP) saying the deal was way too cheap. However, late on Friday Edcon received formal notification from the SRP that the complaint had been dismissed, paving the way for the vote to go ahead on Monday morning.
Currency traders said a “yes” vote would be rand supportive because of the potential of foreign direct investment, pointing out that the inflow of funds into the country would be the biggest since Barclays’ R33-billion buyout of local bank Absa about two years ago. — I-Net Bridge