Long4Life may spend a third of its cash pile to buy back shares

Long4Life, Brian Joffe’s investment group, said on Tuesday that it is seeking to reward shareholders by spending as much as R217m in buying back its own shares.

At af maximm price of R4.35 for each of the 50-million shares, the buyback programme would represent up to a 5.84% premium to the group’s share price as of Monday’s close. By 10.42am on Tuesday, the company’s share price had risen to R4.35.

The company intends to buy back about 5.5% of its 914-million shares in issue, with the programme expected to be completed on October 23. Companies often buy back their own shares when they consider them undervalued as this tends to support the value of the stock. 

Long4Life, the owner of Holdsport, Sportsmans Warehouse and beauty chain Sorbet, had cash and cash equivalents of R871m at the six months at end-August, although Joffe said on Monday that this now stands at about R600m.

Earlier in October, the company spent R304.4m in increasing its stake in Spur to 14.4%.

Long4Life’s share price, which stood at R4.11 on Monday, trades at a discount of about 26.3%  to the group’s net asset value, or the value of underlying assets, of R5.58 per share. The group spent R109.m acquiring 26.8-million of its own shares in the six months to end-August, paying an average price of R4.07 per share.

The company said on Monday., The group intends continuing to buy back its shares on the open market at suitably priced levels to maximise shareholder return.” 

With Londiwe Buthulezi

gernetzkyk@businesslive.co.za