Shares drop as Ayo and AEEI deal collapses
Shares in Ayo Technology Solutions and African Equity Empowerment Investments (AEEI) fell on Monday as the associate companies said they had run out of time to transfer shares in British Telecommunications SA (BTSA) between themselves.
Ayo said in May it had agreed to buy AEEI’s 30% stake in BTSA for R990m. AEEI, which is part of Iqbal Surve’s Sekunjalo Group, listed IT business Ayo in December 2017.
However, the companies said on Monday the agreement had lapsed. They were in talks to have it restored and "shareholders will be advised should the agreement be reinstated".
A spokesperson for Ayo said the parties "are resetting timeframes and will alert the market accordingly".
Ayo’s share price closed 13.8% lower at R25 on Monday – well below its listing price of R43. AEEI lost 11.9% to close at R4.76. The declines preceded the afternoon announcement.
In May, Ayo and AEEI said JSE-approved independent corporate advisory firm Questco believed the deal was "fair" to Ayo’s shareholders.
The net profit attributable to the 30% stake in BTSA for the year to August 2017 was R474m. Under the agreement, AEEI was to provide Ayo with a profit warranty for 2018.
Ayo CEO Kevin Hardy said at the time the deal would allow the majority black-owned company to engage with more multinationals following Ayo’s signing of a multiyear contract with Sasol.
Ayo operates in Africa and Europe and services health-care operators and call centres. It also has reseller or supplier agreements with firms such as Nokia, Siemens Networks SA, Microsoft and IBM, Ayo said.
The Public Investment Corporation, which paid R4.3bn for a 29% share in Ayo, said in May it would scrutinise its investment in the company in light of "negative media reports".