We've got news for you.

Register on BusinessLIVE at no cost to receive newsletters, read exclusive articles & more.
Register now

Is Long4Life’s quest to bulk up its own market capitalisation going to come back to haunt it? Analysts are grappling with founder Brian Joffe’s latest deal: a meaty R3.9bn acquisition of historically fast-growing, low-cost shoe chain Rage. The purchase price is close to Long4Life’s own market capitalisation of R5.3bn, and will cost Joffe a chunk of his start-up’s equity. Rage is expected to make R1.25bn in sales for the full year ended June and R263m in profit, which gives it a price-earnings multiple of 14.9. Says one analyst, who asked not to be named: "Is Rage a great business? I don’t know. What I do know is that it is a single product and single market-focused business, while for a 16 and 17 p:e, I can buy Massmart and Spar Group, which are the complete opposite — large, diversified, defensive." However, Massmart and Spar aren’t producing anything close to the growth Rage is enjoying: like-for-like sales of 16% in the past financial year, according to Long4Life, which is comple...

BL Premium

This article is reserved for our subscribers.

A subscription helps you enjoy the best of our business content every day along with benefits such as articles from our international business news partners; ProfileData financial data; and digital access to the Sunday Times and Sunday Times Daily.

Already subscribed? Simply sign in below.

Questions or problems? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now

Would you like to comment on this article?
Register (it's quick and free) or sign in now.

Speech Bubbles

Please read our Comment Policy before commenting.

Commenting is subject to our house rules.