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Bell Equipment to go private after family-led takeover
17 Jul 2024
Bell Equipment announced that it will delist from the JSE after accepting a takeover offer from IA Bell and Company (IAB), a major shareholder and investment holding company led by the Bell family. IAB, which already holds 70.13% of Bell Equipment's shares, has offered to buy out the remaining minority shareholders for R53 per share, a 71% premium to the closing price on 11 July 2024, the last trading day before the offer was announced. The offer values Bell Equipment at R5.1bn.
Bell Equipment looks to expand its manufacturing capabilities in Europe
IAB said that the delisting would allow Bell Equipment to restructure and adapt to the competitive global industry, and to take a longer-term view in its decision making.
The family also said that Bell Equipment derived limited value from its listing, as the benefits of share liquidity and capital raising were constrained by the lack of investment appetite in small-cap stocks.
The offer is subject to the approval of the required majority of eligible shareholders, as well as the regulatory approvals from the JSE, the Takeover Regulation Panel and the South African Reserve Bank.
This offer is also conditional on the dissenting shareholders holding no more than 5% of the total number of scheme shares.
Strong performance
Bell Equipment reported a strong performance for the year ended 31 December 2023, with revenue increasing by 32% to R13.5bn and profit for the year increasing by 66% to R793.6m.
The company attributed the growth to stronger market demand across its regions, as well as improved operational efficiencies and cost control.
Bell Equipment also announced the appointment of Ashley Bell, a non-executive director, and a member of the founding family, as the new chief executive officer. He replaced Leon Goosen, who resigned in 2023 after six years at the helm.
The company said that Ashley Bell brings “a deep understanding of the yellow metal industry and a proven strategic vision” to the role.
In a statement, Gary Bell, Chairman of the Board, and Hennie van der Merwe, the Lead Independent Director, said:
On behalf of the Board, we extend our congratulations to Ashley on his appointment. His comprehensive knowledge of the Bell group will be of immediate value and a great asset to the Bell team, and his commitment to the group's family values and proven strategic vision align with Bell Equipment's long-term objectives. He will be backed by a dedicated Board and a robust executive team which fully supports his appointment
The company did not declare a dividend for the year, citing the need to preserve cash resources amid the current volatile global political and economic uncertainties.
It also said that this decision would be reviewed at the interim results stage in a Board statement:
Over the last two financial years we gained pleasing traction in realising our planned growth, and we will continue along this path. By its nature, growth in our business requires significant working capital investments in inventory and receivables. With this in mind, coupled with a reflection on current volatile global political and economic uncertainties, the Board has resolved to preserve cash resources rather than paying a dividend at this time. This will be reviewed at the interim results stage
Navigating challenges
In March 2024 CEO Ashley Bell said that the company's team had successfully navigated supply chain disruptions, port congestion, and labour shortages to post the robust performance.
"An investment in solar power installations at both our Richards Bay factory and our Johannesburg sales and distribution facility has mitigated some of the loadshedding challenges in South Africa,” he explained.
“Although this is a long-term cost-saving project, it also offers significant operational advantages by reducing generator running costs and associated emissions due to load shedding and municipality infrastructure failure.”
The company's growth strategy focuses on organic expansion through investment in Bell OEM products, increased market share, and the development of Bell Heavy Industries (BHI) for contract manufacturing in Richards Bay.
This initiative aims to stimulate the South African manufacturing sector and create employment opportunities.
Northern expansion
Bell Equipment is also expanding its manufacturing capabilities in Germany to better serve the Northern Hemisphere market and reduce the logistical challenges of transporting materials and components.
Our expanding European supplier base has amplified the negative impact of 'round-tripping' materials and components from Europe to South Africa and reinforced our decision to manufacture our Northern Hemisphere articulating dump truck closer to both suppliers and markets
The company is set to launch new products, including the Bell Motor Grader in early 2025, and is exploring autonomous technologies and alternative fuel solutions.
Additionally, it is expanding its dealer network in South Africa to enhance support for its forestry and agriculture customers.
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