The stockbroker, fund management and private client business says delisting will level the playing field with competitors.
Anchor Group plans to buy out minority shareholders and delist from the JSE and A2X Markets in a move it says will level the playing field with its unlisted competitors.
If its proposed scheme of arrangement is successful, it will be the latest in a growing number of small and mid-cap companies to leave the exchange, with the costs and onerous requirements of being listed outweighing the benefits.
It’s offering R4.25 per share to minorities, with a comparable offer to employees who are part of its employee share scheme. The offer price represented a 7.59% premium to its closing price on Thursday and a 10.79% premium to the weighted average traded price of its stock over the 30 business days prior to the announcement.
The company said delisting would give it the opportunity to pursue a number of key strategic imperatives that were hampered by being a small cap stock listed in the current environment. In a low interest-rate environment, it said repurchasing shares using debt would be accretive. It would also be in the position to inject significant debt into the business, which it currently couldn’t due to the risk appetite of existing shareholders. Delisting would enable it to clean up its complex group structure and would also result in cost savings associated with listing fees, increased audit fees, JSE sponsor fees and accounting and reporting costs.
Anchor said its fund management, private client and stockbroking director competitors were unlisted and therefore not obliged to comply with onerous public disclosures. Delisting would eliminate any existing competitive advantage they had over it.
Small-cap shares are moving sideways in a no-growth economy: Anchor’s share price has remained stagnant for an extended period, partly as a result of modest performance but notably due to a lack of investment appetite in “small-cap” stocks in South Africa,” the company said. “The Scheme affords existing Shareholders the opportunity to elect to either liquidate all or part of their investment.”
The company has constituted an independent board of directors to evaluate the offer. It said it had already received support from significant voting shareholders, who have irrevocably undertaken to vote in favour of the scheme of arrangement and the delisting.
Its shares rose 5.1% to R4.15 on Friday.
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