Trade in MB Technologies shares was halted yesterday after the price plunged ahead of an announcement that a due diligence exercise had resulted in a lower valuation.
The share was suspended after falling 15c or 12.5% to 105c. It was reinstated this morning to coincide with the issue of a notice saying that a consortium proposing a management buyout had reduced its offer price following a due diligence exercise.
The share lost another 7c or 6.7% to trade at 98c after the suspension was lifted this morning.
The board announced in July that a consortium including the two MB Tech founders - CEO Leo Baxter and chairman Mike McGrath - had proposed buying the group for 140c a share.
The consortium holds in aggregate about 56.2% of MB Tech.
Today`s notice, issued by the MB Tech board, says the offer has been revised and the consortium is offering to buy the group as a going concern for R513.3 million, equivalent to about 110c a share.
An analyst says he initially believed the original offer was actually too low based on the growth the company had reported in its last set of financial results.
"Based on the last set of results 140c was not a good offer," he says. "Now they do a due diligence and value it at 110c. That tells me the results are not reliable."
Today`s notice published on JSE news service SENS stated: "Certain key findings of the due diligence identify that the initial risk assessment of certain of the growth opportunities in the business were optimistic.
"While the business operations remain fundamentally sound, the findings of the due diligence resulted in an adjustment of the forecast growth rates, particularly in the offshore businesses, and a consequent reduction in the valuation of the business."
In terms of the buyout proposal, MB Tech, subject to shareholder approval and the fulfilment or waiver of other conditions, will be liquidated by way of members` voluntary winding up. The liquidation dividend will be paid to shareholders on 4 October.
The share is to be delisted on 7 October.
The MB Tech board says it has appointed Deloitte & Touche to provide it with advice on the fairness of the proposal, specifically with regard to minority shareholders.
Baxter could not be reached for comment this morning.
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