Barloworld Shares Soar Following Premium Buyout Offer from CEO and Saudi Consortium

Barloworld, the renowned industrial and consumer group, saw its shares surge on Wednesday after announcing a buyout offer from a consortium led by its CEO Dominic Sewela and Saudi Arabian conglomerate Zahid. The offer, valued at R120 per share, represents an impressive 87% premium based on the 30-day average share price, and nearly double the group’s valuation in early April.

The consortium, comprising Entsha, a newly established South African company linked to Sewela and his family, and Falcon Trading, a subsidiary of Zahid, aims to acquire the Johannesburg Stock Exchange-listed giant. Barloworld, publicly valued at nearly R21 billion, was founded in Durban in 1902 and has been a prominent supplier of industrial and mining equipment. It is the official Caterpillar distributor across multiple African countries, Russia, and Mongolia. Its consumer business, Ingrain, is a leading provider of starch and glucose ingredients to the food industry.

Zahid, one of the Kingdom of Saudi Arabia’s most established merchant families, has a history dating back to the 1940s, when it represented General Motors and sold its first Caterpillar machine in 1950. Zahid already holds an 18.9% stake in Barloworld, while Sewela and his Katlego Le Masego Trust collectively hold 0.55%.

As part of the proposed transaction, Entsha will hold 51% of the voting and economic rights in the new company. This arrangement aligns with Barloworld’s commitment to enhancing its direct black ownership and retaining its existing empowerment credentials.

In a statement, Barloworld highlighted the consortium’s confidence in the group’s long-term strategy and the regions it operates in. “The unique composition of the consortium, combining executive management expertise through Entsha with a patient capital approach, provides a robust platform to support the company’s leadership, workforce, and operations as it pursues its long-term, diversified growth strategy,” the company said.

Barloworld first issued a cautionary notice in April when its shares traded at approximately R60. By Wednesday afternoon, shares had climbed nearly 20% to R110.

The board, which was approached in February, took immediate steps to manage potential conflicts of interest, given the involvement of the CEO. Measures included the establishment of a steering committee with select unconflicted executives, oversight by external advisers Rand Merchant Bank and DLA Piper, and adherence to strict non-disclosure agreements.

Rothschild & Co, appointed as the independent expert, has delivered a preliminary report concluding that the offer terms are fair and reasonable. A circular detailing the transaction will be issued shortly.

Barloworld’s independent board expressed confidence in the measures implemented to ensure minimal disruption during the review process. “The proposed transaction represents a compelling opportunity for the group to unlock value while preserving its strategic direction and empowering structure,” the board added.

This pivotal moment underscores Barloworld’s historic legacy and its bold vision for the future as it navigates this transformative transaction.