Financial Mail and Business Day

Long4Life offer risks putting another dent in Joffe ‘premium’

There was a time when the Joffe name might have commanded a premium — but that’s gone now.” Those were Brian Joffe’s own words in a 2009 magazine interview when a pile-up of failed deals showed that the hard-driving entrepreneur, whose extraordinary wealth creation credentials had propelled him to near mythical status, was human after all and prone to blunders and miscalculations.

One of those deals was while he was CEO of Bidvest, a sprawling conglomerate he built from the ground up over three decades, which bought a nearly 20% stake in Tiger Wheel & Tyre, whose parent company collapsed and forced Bidvest to take hefty writedown charges. Again in the mid-2000s, Bidvest teamed up with the taxi industry body group, Santaco, to bring a range of Russian-made commercial vehicles to take on deeply entrenched brands such as Toyota and Isuzu in the informal but lucrative public transport industry. That did not pay off either.

What’s more, investors in Adcock Ingram must be annoyed that Joffe robbed them of an easy payout in 2014 when he scuppered a nearly R13bn buyout offer for the pharmaceutical company from Chilean rival CFR Pharmaceutical. In what still ranks as one of the most memorable corporate spats, Joffe went straight to shareholders with a cash offer to buy a big enough stake in the drugmaker to block the CFR bid that had valued Adcock at R12.8bn, or R74 per share.

It is not unreasonable to assume that some of those who had backed Joffe in the tug-of-war were driven by an unwavering faith in a man who has drawn comparison to General Electric’s Jack Welch and Berkshire Hathaway’s Warren Buffett as one of the world’s most respected stewards of shareholder capital. For the man who turned Bidvest from a small, apartheid-era venture selling bakery ingredients into an empire totalling more than 300 businesses ranging from freight and car sales to frozen food, Joffe had no luxury of low expectations.

Yet, judging by Adcock’s share price, which is languishing almost 40% below what CFR would have coughed up to take it private almost seven years ago, the Adcock transaction should count as another example that has chipped away at Joffe’s “premium”.

To that list, he is at the risk of adding Long4Life, a lifestylefocused private equity-style investment holding company he started in 2017 shortly after stepping down from Bidvest. For a glimpse of just how disappointed investors were with an offer from the private equity arm of Old Mutual to buy Long4Life, look no further than Long4Life’s share price.

Shares in Long4Life gained as much as 5.7% before giving up most of the gains to close just more than 2% higher at R5.31, well below the R5.80 unsolicited offer from Old Mutual’s private equity division — typically a sign that investors think the chances of the deal going through are limited.

There are a few reasons for the low optimism. For one thing, the offer is a stingy 11% premium to Long4Life’s closing price on Thursday, the day before news of the deal was disclosed. To add salt to the wound, the nonbinding offer, if successful, will hand Old Mutual assets such as Sportsmans Warehouse, Performance Brands and Outdoor Warehouse at a near 20% discount to their net asset value.

Sure, Old Mutual’s offer helps Joffe cut in half the discount that Long4Life’s share price is trading at compared with the underlying value of its assets. But it is not as if Long4Life is desperate for deals. It is on the right side of consumer trends as brands such as Sportsmans Warehouse tap into the fast-growing and lucrative market of health-conscious consumers who are taking up running, cycling and hiking thanks to the pandemic and ensuing gym closures.

The trend, coupled with an increase in interest in comfortable work-from-home loungewear, has prompted other clothing retailers such as Woolworths to double down on their casual offerings. It is grounds for shareholders to hold out for more, and rally behind Joffe’s foresight of the health-conscious lifestyle trend that has now been turbocharged by the pandemic.

INVESTORS IN ADCOCK INGRAM MUST BE ANNOYED THAT JOFFE ROBBED THEM OF AN EASY PAYOUT

OPINION

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2021-12-07T08:00:00.0000000Z

2021-12-07T08:00:00.0000000Z

https://tisobg.pressreader.com/article/281685438135162

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