Investment holding company IA Bell and Company (IAB) has announced its intention to acquire all issued shares in heavy equipment designer, manufacturer, and distributor Bell Equipment, after which it will delist the company from the Johannesburg Stock Exchange (JSE).
The two firms signed an implementation agreement in which IAB expressed an intention to make an offer for all the issued ordinary shares in Bell Equipment, excluding the 32,233 shares held by Bell Equipment Group Services.
The agreement also excludes the 67 million shares already held by IAB, representing 70.13% of Bell’s issued shares, and the 14.2 million shares held by shareholders related to the Bell Equipment founding family, accounting for 14.82%.
“Shareholders of Bell Equipment are advised that on 12 July 2024, Bell Equipment and IAB entered into an implementation agreement in terms of which IAB agreed to express a firm intention to make an offer to acquire all of the issued ordinary shares in the Company from Shareholders, save for 32 233 Shares held by Bell Equipment Group Services Proprietary Limited, a wholly-owned subsidiary of the Company, and those Bell Equipment Shares held by certain Shareholders which IAB has advised the Company have agreed with IAB to be excluded from the IAB Offer,” a joint announcement from IAB and Bell read.
Eligible shareholders holding about 15.05% of Bell’s shares, will be offered R53($2.92) cash per share. This represents a 71% premium to the closing price of Bell shares on the JSE and an 82.3% premium to the 30-day volume-weighted average traded price of R31 as of July 11.
“IAB holds 70.13% of the Issued Shares (excluding the Treasury Shares), and if the IAB Offer is successfully implemented, IAB, together with the Excluded Shareholders, will own 100% of the Issued Shares (excluding the Treasury Shares),” IAB noted.
To oversee the takeover, Bell has constituted an independent board of directors to evaluate the terms of the scheme of arrangement.
About IAB and Bell
IAB is owned by representatives of the Bell founding family and their affiliates, including Gary William Bell, Peter Charles Bell, the estate of the late Paul Allan Bell, Michael Allan Campbell, the estate of the late David Ian Campbell, and the Cecil Tree Africa Trust.
In addition to its shareholding in Bell Equipment, IAB holds a non-controlling minority 25% stake in Loinette Capital, an asset-based finance provider focused on creating funding solutions for small- to medium-sized enterprises across Sub-Saharan Africa.
IAB stated that for Bell Equipment to remain competitive and adapt to the increasingly competitive industry, it needs to be restructured. This will better position the company in the global market and enhance its agility and flexibility in decision-making, which is unsuited to the listed environment.
In the unlisted environment, the board and management can take a longer-term view, particularly when making strategic decisions that may not yield immediate positive financial results.
“IAB is of the view that Bell Equipment derives limited value from its listing, as the primary benefits of a listing including share liquidity and the ability to raise capital, are constrained. The listing comes with significant costs, both quantitative and qualitative, which do not appear to be commensurate with the benefit derived therefrom,” the investments firm said.
For the year ending December 2023, Bell Equipment reported a two-thirds increase in annual profit, driven by unprecedented global demand for equipment, a positive commodity cycle, and increased infrastructure spending abroad.
The acquisition and subsequent delisting are expected to streamline operations and allow Bell Equipment to focus on long-term growth and competitiveness in the global market.
