JSE-listed Altron and its subsidiary, Altech, have both reiterated that they are in talks, but have not disclosed the nature of the discussions, or any other parties.
The separate cautionary notices to shareholders follow earlier announcements issued by both companies that they were in talks.
Both sets of cautionary announcements were published on the same day, and within hours of each other, causing speculation that Altron is set to finally buy out the 38% in Altech it does not own. The wordings of yesterday's statements also mirror each other exactly.
If Altron does put an offer on the table for the rest of Altech, this would be the second time the company has made a buyout bid. Towards the end of 2007, Altron proposed to Altech and Bytes Technology Group minority shareholders that a deal worth R4.8 billion be orchestrated to bring the two subsidiaries into the fold. This would be settled through a share swap.
Bytes subsequently became an Altron subsidiary, and was its third-largest revenue contributor for the financial year that closed at the end of February. In May 2010, Altron said it was keen to buy out Altech minority shareholders in the future.
In the works?
Altech is Altron's largest revenue contributor, accounting for R10.4 billion in the year to February. In May 2008, the group said it aimed to create one listed entity and - since 2001 - Altron has brought partly owned subsidiaries back into the fold, reducing the amount of companies from 10 to two.
Altech shares closed 3.43% lower yesterday, at R33.80, giving it a market capitalisation of R3.6 billion, while Altron's stock lost 1.39%, to R20.50, making its market capitalisation R2.2 billion.
Altron, which this morning published its annual results, ended the 12 months to February with cash and cash equivalents of R917 million. Cash generated by continuing operations of R1.9 billion was down around 7% on the prior year.
Altron reported revenue 7% higher, at R24.8 billion, while earnings before interest, tax, depreciation and amortisation (EBITDA) decreased 19%, to R1.6 billion, compared with last year. It made a profit for the year from continuing operations of R707 million, a 12% gain.
"Our overall results were impacted by operating losses from the Altech African operations and a disappointing performance from Powertech in the second half of the year. The good news is that Altech East and West Africa have been disposed of, effective 28 February 2013, and R151 million of EBITDA losses will not recur in the current financial year," says CEO Robert Venter.
Altech recently reported its annual results and said revenue from continuing operations was higher, at R10.2 billion, from R9.6 billion last year. While it made a R357 million profit from continuing operations, it reported a R1.6 billion loss from discontinued operations and a loss of R1.28 billion overall.
Although revenue increased, operating profit was lower than that of the previous year, mainly due to losses incurred in Altech's operations in East and West Africa. At the end of September, Altech agreed to sell its 75% stake in Altech West Africa, because the entity required additional investment and it was costly to run from SA.
Subsequently, in January, Altech swapped its troubled East African stake for equity in Liquid Telecommunications, a telecommunications company focusing on developing markets.
Selling these units will see the termination of operating losses of R165 million in East Africa and R39 million in West Africa, totalling R204 million.
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