Nedbank-Eqstra deal gets nod from Competition Tribunal

Nedbank Group’s nearly R1bn acquisition of fleet management business Eqstra Investment from enX has been given the go-ahead by the Competition Tribunal.

The tribunal said it had “unconditionally approved the proposed merger wherein Nedbank Group intends to acquire Eqstra Investment Holdings,” in a short statement on Friday.

Eqstra fleet management provides commercial and passenger vehicle leasing services, including fleet management, outsourcing solutions, maintenance and vehicle tracking solutions.

The deal, first considered by Nedbank’s board in May 2023, will bolster the financial services provider’s fleet management capabilities three years after Bidvest failed to buy Eqstra. This is as a combined Eqstra and NedFleet operation is set to provide an integrated approach to fleet management, which is aimed at providing better quality, cost and scale to their joint clients.

Simultaneously, the transaction will expand Nedbank’s product and services offering in Namibia and Eswatini, while expanding Nedbank Group’s footprint into a new jurisdiction, Botswana.

Petrochemicals, equipment and logistics group enX said the deal came about because it believed keeping Eqstra under its wing might restrict the logistics company’s “growth prospects and restrict the returns that can be delivered to enX shareholders”.

Other factors cited for the sale were that the group might struggle to secure the capital for Eqstra to grow aggressively in the market, diversify its asset base and increase its credit risk appetite.

In a statement on Friday, enX confirmed to its shareholders that all suspensive conditions to the transaction had been fulfilled and the transaction was now unconditional with the Takeover Regulation Panel issuing a compliance certificate.

“The company anticipates that the transaction will be implemented during June 2024,” eNX said.

EnX shares closed 10.18% higher at R9.20 on Friday, having climbed more than 35% in the year to date.

The deal involves Nedbank buying a 50.2% stake in Eqstra at a minimum of R379m and Eqstra repurchasing all its shares held by enX also for a minimum of R379m, resulting in Nedbank and Eqstra becoming the sole shareholders.

If the subscription price stays at the minimum of R379m, then the gross proceeds of the deal, along with other costs, will be at least R890m.

According to the latest audited figures for the year to end-August, the value of Eqstra’s net assets amounted to R529m, leasing assets including 11,300 vehicles amounted to R2.6bn, its loans R511m and profit R109m.

EnX has been trying to sell Eqstra since October 2018, after its board decided it could do no more to enhance the operations of the company it bought in 2016.

Bidvest, the top 40 services and distribution group tried unsuccessfully three years ago to buy Eqstra, after initially agreeing to pay R3.1bn for the business in 2019. 

The deal fell through in May 2020 after approval from the Prudential Authority failed to materialise before the deadline for the transaction.

Nedbank, whose major investors include the Government Employees Pension Fund and Allan Gray, dipped 0.26% in intraday trade to R215.06 on Friday. The stock has climbed nearly 8% over the past six months.

gumedemi@businesslive.co.za