DealMakers - Q2 2021 (August 2021)
by Marylou Greig
Several months into this year, deal reporting once again gained traction, and the relief experienced by the industry advisers was tangible. Investors who had put plans on hold due to the pandemic slowly emerged from the side lines, and advisory firms had their work cut out once more. Noises on the political front were perceived as encouraging; it is no secret that South Africans are good at taking the glass half-full approach.
The total value of M&A activity for H1 2021 (excluding failed deals) was R175,7bn from 213 deals, a significant increase from the previous year’s figures of R108bn off 157 deals. A closer look (page 10) shows that the greater number of deals for the period fell in the ‘over R50m, under R200m’ value category, though the total value of these deals represents just over 2% of the aggregate value for the period. Of the 213 deals executed in H1 by companies listed on one of the local stock exchanges, 186 of these involved companies with primary listings. Of these 186 deals, 36 were cross border transactions by SA domiciled companies with Africa and Europe being the top two regions. Drilling down further, 26% of targets were in the property sector, followed by technology 15% and financial services 11%.
Those corporates such as Anglo American, Sibanye Stillwater, Barloworld and Allied Electronics, among others in the enviable position of being able to give back to shareholders, have taken the decision to do so via share repurchases and/or the distribution of special dividends. On the flip side, 19 companies remain suspended on the JSE. Delistings continue, with 15 companies terminating listings during H1 2021, and a further three (at this stage) set to do so before year-end.
The sell-down by Prosus of a 2% stake in Tencent in April, valued at US$14,6bn, dominates the value table of top 10 transactions for the six months to end-June. Given the hammering received by the Prosus and Naspers share prices in early August in reaction to the Chinese authorities regulatory crackdown on technology companies, a re-evaluation of the stocks may well be seen, at least until a winner to match Tencent can be found.