On Tuesday Holdsport shareholders gave a solid nod of approval for the resolution to trade their shares in the speciality retailer for shares in Long4Life, the new company listed by Brian Joffe, of Bidvest fame. Holders of more than 89% of the Holdsport shares voted at the meeting accepted Long4Life’s offer to acquire all shares in the specialist sporting goods and outdoor company.

This transaction must still be approved by the Competition Commission, explains Holdsport CEO Kevin Hodgson, but they are hoping that this will be finalised by the end of the month.

We live in a regulated business environment, which involves certain processes that must be followed, he says, even if some of them are time consuming. After the competition approval is achieved, Holdsport shareholders will choose if they want Option 1 – to trade each Holdsport share for 12.1 Long4Life shares – or Option 2, 11.2 Long4Life shares plus R5 for each of their Holdsport shares.

Holdsport’s listing on the JSE will then be terminated, and they will revert from a public company to a private company, which will be a wholly-owned subsidiary of Long4Life.

But, for Sportsmans Warehouse, Outdoor Warehouse and the wholesale division of Holdsport, it will continue to be business as usual, assures Hodgson. “This is in essence a transaction between shareholders.”

The Holdsport management and business divisions will continue as before, because the new owners are mindful that it is a well-run business with a long track record and a deep, skilled, management team with lots of experience, he continues.

When Joffe approached Holdsport management with an offer to purchase in July this year, they were obliged to present it to the shareholders, who are the owners of the public company, says Hodgson. While management can exercise their discretion and knowledge of the industry and not waste shareholders’ time by presenting every offer from any random – or tainted – company, they had a duty to present the offer from a person like Brian Joffe, who has an impressive reputation in business.

In a public company the role of management is to facilitate, and in this instance, “given Brian’s vision, reputation and given what he brings to party in terms of capital and deal making prowess, we had to bring his proposal to shareholders,” says Hodgson.

Although he emphasises that the decision to accept the offer – or not – could only be made by shareholders, not management, Hodgson can highlight some obvious benefits for both companies.

“This transaction gives us the opportunity to revert back to a private company. It also gives us access to the capital raised, access to Long4Life’s business acumen, knowledge of the markets and business expertise in general.”

Listing was never their first choice when their relationship with private equity company Ethos ended, because they didn’t have the appropriate scale, says Hodgson. Although, with a share price rising from R31 when they opened in July 2011 to about R66 currently, and having paid R16 per share in dividends, Holdsport shareholders have many reasons to be happy with the management team.

But, “we did not want the added responsibility of being in the public domain and we didn’t really need to go to market to raise capital,” Hodgson says. Instead, they hoped to find a buyer “who understands what we do, has access to resources, and offers all the benefits of scale, which is a big thing in business.”

This they found in Long4Life, who benefits from the transaction because “this is a well-run business with a management team that has been working together for a long time. They (Long4Life) don’t have the skills to run a highly specialised sporting goods business, neither is it their desire to do so.”

Holdsport also offers them a cash-generating platform from where they can reinvest or make other acquisitions. “They can use this business as a platform to make other acquisitions in areas we can add value to.” The sporting goods company therefore adds value, and offered them a strong – almost R3-bn – transaction.

Joffe is a visionary, who looks at the world from a different view, adds Hodgson. “He likes the concept of decentralised and empowered management.” Holdsport’s divisions already operate in a decentralised way, each run by their own management team, but with some degree of sharing of knowledge and ideas.

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