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The initial euphoria that greeted Famous Brands’s Gourmet Burger Kitchen (GBK) deal shows that shareholders also underestimated how tough things were about to get. While management must accept most of the blame, a healthy dose of introspection is needed on the part of the investment community, too. Within weeks of the announcement in early September 2016, the group’s shares soared to record highs of nearly R170. But soon after, the cracks began to appear, and Famous Brands’s biggest deal came back to haunt it. The stock is now hovering around the R100 level — or back to where it was four years ago. Woolworths investors were also blind to the dangers of huge offshore deals. In 2014, shareholders approved the retailer’s $2bn acquisition of David Jones. Years later, the group is also reeling from the ill-judged takeover. These deals, both poisoned chalices, show that major shareholders need to scrutinise target companies more closely. Kevin Hedderwick, Famous Brands’s group strategic a...

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