Barloworld Shareholders Urged to Accept Saudi-Led Takeover Offer
Institutional Shareholder Services (ISS) and Glass Lewis & Co., two prominent proxy advisory firms, recommend that Barloworld Ltd. shareholders accept the takeover offer for its Caterpillar equipment distribution business in Africa.
Fair Value Assessment
According to ISS and Glass Lewis, the offer from a consortium led by Saudi Arabia's Zahid Group and local partners values the stock at 120 rand per share, or 23 billion rand ($1.2 billion). Rothschild & Co.'s independent due diligence determined the stock's fair value to be between 105.53 and 119.43 rand per share.
Attractive Premium
Glass Lewis describes the proposal as "an attractive opportunity for shareholders to exit the stock at a reasonable cash premium." ISS adds that "the offer is at an attractive premium."
Investor Reaction
Silchester International Investors LLP, which holds close to 18% of Barloworld, has indicated that it will reject any offer below 130 rand per share.
Deal Approval Process
Barloworld has scheduled a shareholder meeting on February 26th to vote on the deal. Approval requires support from 75% of investors.
Saudi Group's Strategic Bets
Gulf Falcon Holding and Entsha Ltd., the Saudi-led consortium behind the offer, anticipate increased construction activity in Africa driven by urbanization, expanding middle class, and government infrastructure investments.
Middle Eastern Investment in Africa
The offer reflects a growing trend of Middle Eastern companies seeking investments in Africa as they seek to gain influence alongside established players like China and France.