Newco, a recently formed special purpose consortium, which is intensifying efforts to drive its bid to acquire JSE-listed industrial giant Barloworld, said on Friday that it will be engaging the Public Investment Corporation on its broad-based transformation objective.
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Newco, a recently formed special purpose consortium, which is intensifying efforts to drive its bid to acquire JSE-listed industrial giant Barloworld, said on Friday that it will be engaging the Public Investment Corporation (PIC) on its broad-based transformation objectives.
Newco comprises Entsha Proprietary and Gulf Falcon Holding, a wholly-owned subsidiary of Zahid Group.
Newco's statement comes amid a contentious takeover battle that has pitted the Consortium against Barloworld’s second-largest shareholder, the PIC, and seen governance concerns dominate headlines.
Caterpillar has also reaffirmed its support for the group’s Standby Offer.
Caterpillar, Barloworld’s primary revenue driver, issued a statement on March 4, endorsing the Standby Offer structure that emerged following the collapse of the Consortium’s initial scheme of arrangement.
The equipment manufacturer, a key player in Barloworld’s operations, stated, “It is our firm belief that locally-owned dealerships are best positioned to serve customers, drive sales and service growth, and tailor investments to regional requirements.”
It added, “Private ownership structures foster long-term decision-making and investment strategies. This structure, which is pursued with the Standby Offer, aligns with Caterpillar’s Africa localisation and private ownership strategy.”
Sydney Mhlarhi, the spokesperson for the Consortium, said, “The Consortium is pleased that Barloworld’s largest shareholder, the PIC believes that the offer price still presents a premium to the company’s fair value and is within the Independent Expert’s valuation range, and that it understands Caterpillar’s preference for privately owned, local dealerships. The Consortium views this as supportive."
The takeover saga began heating up in late 2024 when the Consortium, backed by Saudi-based Zahid Group and including Barloworld CEO Dominic Sewela as a director of Newco, proposed a R23 billion buyout. The initial scheme of arrangement, offering R123.10 per share (including a R3.10 dividend), was shot down at an extraordinary general meeting on February 26.
However, the PIC, holding a 21.97% stake in Barloworld, publicly opposed the deal on February 28, citing governance concerns. “The PIC is concerned with corporate governance standards at Barloworld and the steps its board followed in considering the transaction in question,” it stated, though it acknowledged the offer’s premium to fair value, aligning with independent valuer Rothschild’s range.
But the PIC’s opposition has not been the only hurdle. UK-based Silchester International, another significant shareholder, also resisted the buyout and de-listing plan, reportedly eyeing the dismissal of Barloworld’s board and Sewela as CEO. Sewela’s dual role as both Barloworld CEO and a Newco director has fuelled controversy, though the company has defended its transparency.
On February 26, Barloworld stated, “From the time the Consortium approached the company with a non-binding indicative offer, the composition of the Consortium and the nature of CEO Sewela’s involvement was fully disclosed to the Board and the resultant conflict of interest was declared.”
Barloworld’s financial performance adds context to what's at stake. For the year ended September 2024, revenue dropped 7% to R42bn, with operating profit from core activities falling 12.6% to R3.8bn and Ebitda declining 7% to R5bn. Gross debt, however, eased 29% to R7.9bn.
The Standby Offer’s longstop date is September 11, extendable by three months if regulatory delays persist.
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