MB Technologies shares were trading 5.6% up on the JSE this morning after news of a proposed management buyout.
The share was 7c up at 132c after the group announced that a management consortium has proposed to pay 140c a share to buy the MB Tech stocks it does not already own.
The consortium, consisting of the group`s founders - CEO Leo Baxter and chairman Mike McGrath - as well as senior management and Central Holdings, already owns about 53.35% of the company.
"The markets have been so much in the doldrums that to remain listed no longer serves the purposes of the group," Baxter says.
He says MB Tech has been reporting good financial results year after year, but this has not been recognised.
"The market hasn`t worked for us. It`s been really soft and it hasn`t helped us reach our goals. If we had known at the time of listing that this would happen, we wouldn`t have listed. It`s also expensive to be listed, and half of management`s time has been taken up with issues relating to being listed. It`s just not worth it."
The proposal values the group at almost R572 million, which means the consortium will pay almost R267 million for the remaining shares.
The MB Tech board says it received a letter from a special purpose vehicle backed by the consortium and Absa Bank expressing the intention to offer to buy all the issued ordinary shares.
Alternatively, the special purpose vehicle (Clidet No 408) will offer to acquire all the assets and liabilities of MB Tech. In that event, a capital distribution dividend of 140c per share will be paid to shareholders as an advance distribution in a members` voluntary winding-up of the company.
Baxter says although this is lower than the 200c at which the company listed, it does represent a 40% premium on the prices placed on the share in capital-raising exercises.
An analyst says that with the prolonged downturn in the market, he would be surprised if there will not be management buyouts at other IT companies.
"I wasn`t expecting the announcement, but I can`t say I`m totally surprised. When companies are trading at prices that are well below their inherent value, you`re either going to see management buyouts or takeover attempts. We saw a takeover attempt at Idion [Technology Holdings] the other day and now there`s a buyout at MB.
"It won`t be the last either. When shares are cheap, management buys."
MB Tech says the proposals are subject to, among other things, regulatory approvals and Clidet conducting a due diligence exercise.
The board has also received a letter from Clidet confirming it has satisfied the Securities Regulation Panel that it has the financial resources to meet its obligations in terms of the proposals.
Baxter says there will be no changes in the business once the group goes private, although "one or two little businesses, not core operations, may be disposed of".
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