The New Zealand Stock Exchange, which owns 22% of the Bond Exchange of South Africa (Besa), said on Monday it would not back the JSE’s $17-million bid for Besa at the current price.
NZX, BESA’s biggest shareholder, said in a statement that while it would await the verdict of Besa’s financial advisors, it believed the bourse operator’s unsolicited R90 per share offer was too low and undervalued the firm.
”NZX’s initial view is that the JSE offer price is extremely low, is very significantly below fair value, and NZX would not support a takeover at this offer price,” it said.
The JSE said last month it planned to make a conditional offer to buy Besa for R173-million to help it expand the interest rate securities market and better compete internationally.
Besa said on Monday it was still taking advice on the offer and would not rule out seeking a white knight.
”We are exercising our minds around a whole host of things, and will need to ask if there are others prepared to pay more,” said chief executive Garth Greubel, adding Besa had not spoken to any possible bidders.
The JSE, which has been eyeing Besa for about a decade, has said it plans to offer R90 per share in cash, a premium of 106% to the net asset value, excluding the Bond Exchange guarantee fund.
But Greubel said factors beyond net asset value, such as Besa’s growth plans and the impact of any merger on competition, should also be weighed.
Greubel noted some of Besa’s shareholders such as major banks are also its clients and argued they may be loathe to see competition in the interest rate securities market stifled by a takeover.
Besa is not publicly listed. In addition to NZX, Investec Group owns 15%, 5,3% is owned by financial services group Purple Capital and Standard Bank has 6,9%. The remaining 50,8% is held by various shareholders.
The Bond Exchange of South Africa specialises in interest rate products. It has about R99-million in guarantee funds. – Reuters