Verimark’s Michael van Straaten in new bid to go private
The retailer's first attempt to delist, in 2009, was scuppered by minority shareholders
Nine years after a failed attempt to take Verimark private, CEO Michael van Straaten is trying again with a buyout offer to all minority shareholders so the company can be delisted.
The 41-year-old retailer, which has lost about two-thirds of its market capitalisation since listing in July 2005, joins a handful of other small-cap firms with plans to leave the JSE.
These companies include logistics provider Cargo Carriers, mining group eXtract and industrial firm Torre Industries.
Monday’s announcement that the Van Straaten Family Trust wanted to buy out Verimark’s minority shareholders and subsequently delist the company lifted the retailer’s stock 11% to R1.01, valuing it at R113m.
Monday’s gain was the biggest since August 22.
Verimark sells imported homeware, fitness, beauty and educational products.
The company listed 13 years ago at a valuation of more than R300m. Slightly more than a year later, its market capitalisation peaked at R474m.
But a sharp decline in profitability followed, prompting Van Straaten to pursue a return to privacy for his business in 2009. However, with the help of the courts, minority shareholders ultimately blocked that attempt.
Also on Monday, Verimark reported that it had made a loss of R2m in the six months ended August, from a profit of R1m a year before. Revenues were 1% lower at R208m.
One of the company’s largest minority shareholders, who spoke on condition of anonymity, said the buyout offer “comes at an interesting time”.
The interim loss was “irrelevant” as the business was seasonal and would likely make up for this in the second half, the investor said, adding that Verimark had generated “healthy” cash flows.
“There are a number of exciting products being launched, and in the rapid move to online retailing, Verimark is well-positioned. Also, prospects outside of SA look interesting and more controlled this time round.”
Verimark said in its results commentary it was growing its international business, partly to mitigate against the rand’s volatility.
The company had relaunched its website, which “continues to gain traction with a growing online presence on social media”.
“The company has a number of exciting innovative products which will launch in the next six-month period,” it added.