Altron wants all of Altech

Allied Electronics Corporation (Altron) wants to buy out the minority shareholding of its Altech subsidiary in the future.

Altron CEO Robert Venter says Altech is the company's core asset, and Altron may, in the future, look at buying out minorities. However, the timing is not right, he adds.

Altech, which is 62%-owned by Altron after it increased its stake two years ago, is the biggest contributor to revenue and profit. In the last financial year, it contributed 41% to revenue, and 55% to profit.

The Altech share has a price-to-equity ratio of 12.48, making it only slightly cheaper than Altron's own ratio of 14.12. Venter says the timing is not right because of the relative values of each company's share price.

Venter says incorporating Altech into the fold will allow Altron to leverage synergies between its divisions, which include Powertech and Bytes Technology Group.

When Altron makes the offer, it will be the second time it has tried to buy out minorities in the profitable subsidiary.

In December 2007, Altron made an offer to shareholders holding 38.2% of Altech. However, shareholders - primarily the Public Investment Corporation - did not approve the sale, and the idea was shelved.

In May the following year, Altron said it had bought more of Altech, and a complete buyout was still on the cards. Venter said at the time that the company still wanted to create one listed entity.

Since 2001, the group has brought partly-owned subsidiaries back into the fold, reducing the amount of companies from 10 to two.

Altech is Altron's best performing unit. In the year to February, it reported operating profit up 7%, to R933 million, off the back of revenue growth from R9.16 billion to R9.2 billion. Headline earnings per share moved up to 605c, from 592c.

Venter said earlier this month that Altech's good performance had shielded Altron from lacklustre results from Powertech and Bytes.

However, in the year ahead, he expects Powertech and Bytes to drive growth. Powertech has trimmed costs and will now look at growing revenue streams by adding new products to its range.

Bytes has also cut out the dead wood and is set to grow in the year ahead.