Formal buyout offer for Alviva sends shares soaring

Shares in Alviva shot up more than a tenth on Wednesday as a formal buyout offer was tabled for the technology conglomerate. 

The group has been subject to an expression of interest from its two large empowerment shareholders, THAM Investments and DY Investments, that pencilled in a R28-a-share offer to minority shareholders.

On Wednesday, Alviva, which provides a range of technology products and services including assembling of computers, distribution and software, said the consortium has made a binding offer to buy out and delist the company for R2.5bn.

The consortium already owns 18.7% of Alviva stock. 

The latest news resulted in the share spiking in morning trade, closing 10.29% higher at R26.80.

The deal is meant to be settled with a cash offer of up to R2.562bn, about R28 per Alviva share that the consortium does not already own, which represents a premium of 45% to the 30-day volume weighted average traded price of R19.29 and 44% above the closing price of R19.50 on June 24, when the expression of interest was announced. 

Once the deal is complete, Alviva will become yet another technology firm to delist from the JSE, joining the likes of Adapt IT and Etion, which is in the process of doing so.

Alviva, in which 36One Asset Management is a major shareholder, is one of Africa’s largest providers of information communication technology (ICT) services. It operates in most African countries, and sells in the sub-Saharan African markets through resellers and national retail chains.

This latest development comes a few week after the group’s AGM where shareholders were still keen to know if any other potential offers are possible.

Some Alviva investors have been clamouring for a higher buyout offer, a call that became louder after the group recently reported earnings of 545c a share for the year to end-June. That means the proposed buyout is being pitched on an undemanding historic earnings multiple of four-and-a-half times.

The end-June financials showed revenue and earning before interest, taxation, depreciation and amortisation (ebitda) targets for financial 2022 of R20bn and R1bn respectively were easily exceeded with top line up 57% to R23bn and the profit line up 62% to R1.4bn. Cash generated was R647m — equivalent to a reassuring 530c a share.

But the outlook for the financial year ahead is cloudy. Alviva noted a decrease in demand for personal computing products since March — indicating that this, with an economy constrained by energy costs and rising interest rates, will make it difficult to maintain earnings at the 2022 level.

Outside the buyout, Alviva has been buying up businesses rapidly in recent years.

In 2020, it acquired 70% of enterprise software company Synerg SA, through its subsidiary DCT Holdings, for R69m. Alviva took a 51% position in Synerg UAE and Synerg UK for a combined R120m. Alviva also acquired an additional 10% in Digital Generation, a black women-owned ICT company, for R15m, increasing its shareholding in the company to 80%.

Alviva is acquiring privately owned Tarsus, a distributor of IT hardware products. It first announced the deal, to the value of R185m, in November 2020.

With Marc Hasenfuss 

gavazam@businesslive.co.za