Rage: Brian Joffe’s R3.9bn Imelda Marcos moment
The terms of Brian Joffe’s latest deal, especially the equity he is giving up, have some analysts scratching their heads
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...
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