LAB Acquisition Neutral
LABAT AFRICA LIMITED - Acquisition Of The Additional 24.45% Of Classic International (Pty) Ltd
Labat Africa Limited
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What this filing means
Labat Africa will issue 900 million new shares at R0.03 to buy the remaining 24.45% of Classic International for R27 million, taking full ownership of a high-margin ICT subsidiary. The strategic logic looks clean on a NAV basis, but the structure meaningfully dilutes existing holders in a small, illiquid R45 million-cap name — and with the deal first flagged in a cautionary on 14 May and the share up 87% over the 20 days before the print, this reads as expensive confirmation rather than a fresh…
Bull case
- Full ownership of Classic eliminates prior minority-share earnings leakage, consolidating the subsidiary's complete profit stream within the group going forward.
- Classic's R201.9m net assets materially exceed the implied pro-rata book value of the 24.45% stake, pointing to an acquisition priced at a meaningful discount to NAV.
Bear case
- Issuing 900m new Labat shares at R0.03 to fund a R27m deal materially expands the share base and dilutes existing holders' proportional claim on the group.
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