Rival bidders may contest opening offer for Softli
First offer viewed ascheap and opportunistic'
Information Technology Editor
DIRECTORS making a widely criticised bid to buy out and delist Softline look set to see their "unfair" offer trumped by a rival bid led by one of its former managers.
The 130c a share offered by Softline's existing managers has been condemned by some institutional investors as cheap and opportunistic. Yet the directors have refused to raise the offer, despite KPMG warning 130c is probably unfair to long-term investors as it does not reflect Softline's fundamental value.
Now shareholders may be offered 145c by Ivan Ferrer, a minority shareholder who has launched a counter-attack with the backing of the Dutch software company Exact Holding. Softline shares leapt by 16c to 144c yesterday after the potential bid was announced. Ferrer is the founder of Pastel Software, which was bought out by Softline in 1999.
Ferrer and Exact have written to Softline chairman Marcel Golding requesting in-depth information about the company, and a formal offer will materialise if the due diligence report reveals nothing untoward. The consortium is entitled to the same information that the Softline managers have access to, and has requested information including Softline's as yet unpublished results to the year ending March.
Ferrer left Softline two years ago and is known to have clashed with its CEO Ivan Epstein, who is leading the attempted management buy-out. But Ferrer said there were no ill-feelings.
"We had our differences, but my motivation is that as a minority shareholder I was not willing to see an offer go through which is prejudicial to shareholders. When I read about the offer I was pretty upset. I called the CEO of Exact, and flew out to put my proposal to the board."
Exact is listed on the Euronext Amsterdam Stock Exchange and its balance sheet shows it has plenty of money.
Even if a counter-offer does not materialise, the move is likely to strengthen the resolve of shareholders, including Metropolitan Asset Managers and Old Mutual Asset Managers, who feel shortchanged. African Harvest holds 7% of Softline and also has condemned 130c as undervalued.
Yesterday its investment manager Anthony Sedgwick welcomed the potential counter-bid, and said 145c may be an opening gambit that could rise after Ferrer and Exact assessed the business thoroughly.
"I'm not surprised that someone else who has an intimate knowledge of the company has recognised that 130c was cheap. I don't think 145c is fair value either, but it implies that they think it is worth at least 145c."
A bid of 145c values Softline at R569m. Sedgwick said a cursory examination of Exact's financial statements showed that was easily affordable, as it had à 80m in cash and a market capitalisation of à 345m, or about R3,5bn.
Softline has not yet responded to the new consortium's approach, but Epstein has previously defended the 130c bid as a 40% premium to its share price in February when the first cautionary was issued.
The Bottom Line: Page 12
Jun 13 2003 06:10:22:000AM Lesley Stones Business Day 1st Edition
Friday
13 June 2003
Profile Group (Pty) Ltd. has taken care in preparing all information on this website, but does not accept any liability for errors or out-of-date information.
