Brian Joffe. PictureL SUPPLIED
Brian Joffe. PictureL SUPPLIED

What would have been Long4Life’s biggest deal to date is off the table.

Brian Joffe’s acquisitive investment holding company has shelved a deal to buy fast-growing shoe group Rage, "by mutual consent".

While Long4Life issued no further detail, the proposed R3.9bn offer, first pitched to the market in June, had raised eyebrows among analysts given its size relative to Long4Life’s own market capitalisation.

At the time the deal was first mooted, Long4Life’s market cap was R5.3bn. That has since fallen to R4.5bn. Long4Life would have given up almost 23% of its shares to pay for the company, in addition to R2.4bn in cash, for which it would have had to raise R1.5bn in debt.

Rage, which plans to open 90 new outlets a year, was expected to make R1.25bn in sales for the year ended June and R263m in profit, giving it a price-earnings multiple of 14.9.

"It was surprising that Long4Life would have been willing to pay such a full price [for Rage] when the environment in which it operates was deteriorating," said Fairtree Capital portfolio manager Jean Pierre Verster, adding that the decision to walk away was positive. A trading update from Pepkor and Shoprite’s results released on Tuesday was further evidence of just how tough it had become for SA consumers, he said.

Established 22 years ago, Rage was bought by husband-and-wife team Jeffrey and Merle Gochin in 2006. It has since grown to 555 stores across the country, with much of that growth taking place in the past seven years.