ROB ROSE: The trouble with EOH
The once high-flying tech firm has been firmly drawn into the centre of SA’s corruption epidemic, raising questions about its due diligence
Technology company EOH must be thanking its blinking red ticker that furniture firm Steinhoff hit the wall quite when it did. Otherwise the precipitously steep drop in the value of the company founded by Asher Bohbot in 1998 would have made EOH the poster child for the biggest investment disaster of 2017. As it is, it’s already been a brutal reality check for a company that, until recently, was a much-courted darling of the JSE. For years, EOH’s stock has been heading steadily upward (up 459% over a decade) as it swallowed rivals using its own high-flying shares as currency. Profits soared more than 30%/year. The problem is, sooner or later you hit a wall. First, you end up scraping the bottom of the barrel for what’s left on the shelf to buy. Then the fact that you’ve been dishing out shares like Transnet board appointments at the Gupta compound comes back to bite you. So, within 48 hours from Wednesday last week, EOH’s stock plunged 42%. Sure, the price had been slipping for month...
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