Verimark shareholders approve delisting
By Nick Hedley - Jan 21st, 09:36
Verimark shareholders approved a plan to take the direct retailer private, sending the stock to its best close in nearly eight years.
93.9% of investors present at the shareholder meeting said they were in favour of a delisting. Just 43.3% of eligible shares were voted on.
The company’s shares, which are expected to be delisted from the JSE on February 19, closed 5.8% higher at R1.45 — the best level since September 2011.
The stock has climbed 59% since the retailer’s founder, Michael van Straaten, announced a plan in October 2018 to buy out minority investors for R1.50 a share and delist the company.
The Van Straaten family later told shareholders they had not derived the benefits of being invested in a listed company in part because of the group’s volatile earnings. Being dependent on imports, the company is at the mercy of exchange rate fluctuations.
The share had also underperformed since listing in 2005 at R2.50, the family said in a circular to shareholders in December.
Further, the delisting made sense given Verimark’s “low market capitalisation, lack of analyst coverage and institutional support”, and the illiquidity of the stock.
The company, which sells imported homeware, fitness, beauty and educational products, had also not been able to use its scrip to fund acquisitive growth.
“The lack of inorganic strategy and the use of highly rated scrip to finance acquisitions, negate an important rationale to remain listed.”
Van Straaten tried and failed to take the company private almost a decade ago when its valuation was in decline.
The company listed at a valuation of more than R300m, though slightly more than a year later, its market capitalisation peaked at R474m.
A sharp decline in profitability followed, prompting Van Straaten to pursue a return to privacy for his business in 2009. However, with the help of the courts, minority shareholders ultimately blocked that attempt.
In the six months ended August 2018, Verimark recorded a loss of R2m, versus a profit of R1m a year before. Revenues were 1% lower at R208m.
A number of other small-cap firms have announced plans to leave the JSE in recent months, including logistics provider Cargo Carriers, mining group eXtract and industrial firm Torre Industries.Business Live
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