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Blue Label gets buyout offer

Nicola Mawson
By Nicola Mawson, Contributor.
Johannesburg, 01 Oct 2014
Joint CEO Brett Levy owns 10.78% of Blue Label.
Joint CEO Brett Levy owns 10.78% of Blue Label.

Blue Label says it has received a non-binding expression of interest from an unnamed party to buyout all its shares.

The group, which has not indicated at what price this expression has been made, notes its board is in talks with the party and "will up-date shareholders whenever appropriate".

Blue Label is currently trading at R9.75, giving it a market capitalisation of R6.6 billion, although an offer is likely to be at a premium. However, large stakes in the company are held by institutional investors as well as the two CEOs.

As of May, Allan Gray had a 20.42% stake, while Shotput Investments owned 15.23%. Joint CEO Brett Levy owns 10.78%, while his brother Mark - also joint CEO - holds 9.81%.

Blue Label cautions that the expression of interest does not "constitute a firm intention to make any offer and it is possible that no offer may result from this process". It says shareholders should be cautious when trading.

In the year to May, the listed company grew revenue 2% to R19.4 million - from R19 billion - and said its investment in its local distribution channels crimped its margin growth in SA. Blue Label recently bought Retail Mobile Credit Specialists, which provides telecommunication products and services, content, data and allied activities.

It has also expanded through its purchase of a 75% stake in Via Media, a mobile content and value-added services provider. Both these deals will enhance its profitability, and give it access to new distribution channels.

The company is cash positive, having ended the period with R1.2 billion in cash resources.

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