The ownership of one of Southern Africa’s biggest sport and outdoor retail chains will be decided on October 3 when Holdsport shareholders will vote for, or against, Brian Joffe’s Long4Life offer to acquire all shares in the company.
According to a circular posted to Holdsport shareholders on 31 August, they will have the option to adopt the Option A Scheme – exchanging one Holdsport share for 12.10 Long4Life shares – or Option B, receiving R5 in cash for each Holdsport share, plus 11.20 Long4Life shares. Or vote against both.
According to an estimate in the circular, the financial effect on Holdsport shareholders if all adopt Option A will be a 14.2% loss in the value of basic and diluted earnings per share, valued at 455.6c each before the transaction. Should they all adopt Option B, the loss per share will be 14.6%.
Should the sale go ahead, Holdsport will become a 100% owned subsidiary of the Long4Life Group, an investment holding company listed by former Bidvest CEO Brian Joffe earlier this year. Its stated objective is to invest primarily in businesses with attractive growth prospects, led by strong, entrepreneurial-minded management teams – which they believe applies to Holdsport.
According to their prospectus, Long4Life believe that the acquisition will prove “to be key in building the Long4Life investment platform”. They want to grow the current number of Holdsport stores, probably in a smaller retail format “at a reduced capital set up cost, which should improve the return on investment.” They also believe there are opportunities to expand into Africa and acquire further global brands.
Holdsport currently consists of Sportsmans Warehouse with 38 stores in South Africa, plus one in Windhoek; Outdoor Warehouse has 24 South African stores, plus one in Windhoek. The Performance Brands wholesale division includes local brands First Ascent, Capestorm, Second Skins and the safari brand African Nature.
According to the circular to shareholders the Holdsport board believes the proposed acquisition is an “attractive opportunity for the Holdsport shareholders to realise value for their current shareholding, as well as the opportunity to participate in the growth opportunity in Long4Life.
“Having Long4Life as the sole shareholder of Holdsport will provide Holdsport with access to Long4Life’s strong balance sheet, providing appetite and capacity for growth both acquisitively and organically, as well as access to Long4Life’s management team providing proven deal making expertise,” which they believe will help grow the business.
Holdsport will announce its interim results for the six months to 31 August 2017 on 29 September 2017.