Vodacom offer not cheap
Vodacom’s YeboYethu discounted public offer scheme, part of its R7.5bn rand BEE programme, is not cheap compared with MTN shares, analysts said on Tuesday.
Earlier Vodacom unveiled further the details of the much-awaited R7.5bn BEE deal which included a public offer to the black public, black groups and its black business partners as well as participation by Vodacom’s staff and two broad-based strategic partners – Royal Bafokeng and Thebe Investment Corporation.
"This transaction is not cheap and people are locked in it for too long. I would buy MTN shares. Yes it’s paying good dividends, but the terms of the deal make it unattractive," an ICT analyst who declined to be named said.
The R7.5bn deal equates to an effective 6.35% interest in Vodacom SA’s operations, valuing it at R120bn.
Black people, black-controlled groups and Vodacom’s SA black business partners can participate in the black public offer. A total of 14.4 million YeboYethu shares will be available for subscription by the black public.
Of these, 3.6 million YeboYethu shares will be reserved for Vodacom’s black business partners, who are black people forming part of Vodacom’s SA distribution network and who have been invited by Vodacom SA to participate in the offer.
Vodacom will facilitate the deal at a 10% upfront discount of R7.50m, and provide the BEE participants with notional vendor finance of R5.85bn for a period of seven years.
Other terms of deal include that no dividend will be paid to the BEE participants for seven years to allow Vodacom to repay vendor finance, and trading of shares will only be allowed after 10 years and only with Vodacom’s approved BEE parties.
"Yes the deal is heavily vendor financed and Vodacom would need to recoup the facilitation costs, but there’s nothing stopping them from locking them in for three years," the analyst said.
In addition, MTN offered better growth prospects than Vodacom, with the analyst saying by MTN was likely to grow by 25% more than Vodacom in the next three years.
Loading ...