Fair-price warning for Consol investors
Mathabo le Roux
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Trade and Industry Correspondent
AN INSTITUTIONAL investor has put the fair value of Consol shares at R20-R21 and has advised investors against accepting offers below this level.
The glass packaging manufacturer issued a cautionary last week, saying the board had received a takeover offer. Speculation was that the offer came from a prospective foreign buyer.
The news sent Consol shares soaring 20%. In spite of the spike, analysts thought that the stock was undervalued at the time of the announcement.
Shares were trading 1% lower, at R14,75, yesterday, considerably below the recommended fair value that Oasis Asset Management suggested in a statement.
The suggested fair value level would price a takeover at R6,3bn-R6,6bn, against a current market capitalisation of R4,65bn.
Oasis warned that the transaction should not reflect past delistings where ôselling out too cheaply had destroyed value for South African investorsö. Oasis cited the buyout and delisting of Energy Africa by Tullow Oil three years ago, at a delisting price of 95p. Its assets were now priced at four times that value at ú3,80.
Recently, investors were disappointed when Anglo American sold 50% of its stake in Highveld Steel to Russian steel maker Evraz and financial services group Credit Suisse at just more than R62. This was short of market expectations. Highveld shares rallied to just under R100 after Anglo announced it was to sell the stake.
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