Bell Equipment shares up 45% on buyout offer

Bell Equipment shares are up 45% after the company announced that IAB plans to make an offer to acquire all of its issued ordinary shares and delist the company.

Bell Equipment is South Africa’s only major designer, manufacturer and distributor of heavy equipment.

In a SENS announcement released this morning, Bell informed shareholders that on 12 July 2024, Bell Equipment and IAB entered into an implementation agreement.

In terms of this agreement, IAB agreed to express a firm intention to make an offer to acquire all of the issued ordinary shares in the company from shareholders.

This excludes 32,233 shares held by Bell Equipment Group Services Proprietary Limited, a wholly-owned subsidiary of the company, and those Bell Equipment shares held by certain shareholders, which IAB has excluded from the offer.

Shareholders that can participate in the offer represent around 15.05% of Bell’s shares. 

They will be offered R53 cash per share, a premium of 71% to the closing price of Bell shares, and a premium of 82.3% premium to the 30-day volume-weighted average traded price on the JSE of R31 on 11 July.

IAB is an investment holding company owned by representatives of the founding family and affiliates of Bell Equipment, these shareholders being –

• Gary William Bell
• Peter Charles Bell
• The estate of the late Paul Allan Bell
• Michael Allan Campbell
• The estate of the late David Ian Campbell
• Cecil Tree Africa Trust

In addition to its shareholding in Bell Equipment, IAB holds a non-controlling minority 25% stake in Loinette Capital, which is an asset-based finance provider focused on creating funding solutions for small- to medium-enterprises across sub-Saharan Africa

IAB holds 70.13% of the company’s issued shares, and if the IAB Offer is successfully implemented, IAB, together with the excluded shareholders, will own 100% of the issued shares.

If the offer is completed, IAB intends to delist Bell Equipment from the JSE.

“IAB believes that for the company to remain competitive and to adapt and grow in an increasingly competitive industry, the company should be restructured to better position itself in the global arena and to enhance its agility and flexibility in decision making, which is not suited to the listed environment,” the company explained.

“In the unlisted environment, the board and management of the company will be able to take a longer-term view in its approach to managing the company and its business undertakings, particularly where certain strategic decisions are necessary which are unlikely to yield positive short-term financial results.”

“IAB is of the view that Bell Equipment derives limited value from its listing, as the primary benefits of a listing, including share liquidity and the ability to raise capital, are constrained.”

It said the listing comes with significant costs, both quantitative and qualitative, which do not appear to be commensurate with the benefit derived therefrom.

This announcement has sent the share price skyrocketing, as it is up around 45% at the time of writing.