BUSINESS ROUNDUPFEDSURE BUYS SA DRUGGISTS Life insurance group Fedsure has emerged as a surprise bidder for Sanlam's 30% shareholding in pharmaceutical group SA Druggists (SAD).
The deal has been struck at R27 an SAD share and values Sanlam's stake at about R640-million.
Fedsure will pay for the acquisition, which is subject to a due diligence study, by issuing 5.7-million Fedsure shares and R155-million in cash.
The deal almost completes the unbundling of Sanlam's former investment arm, Sankorp, which has seen companies as diverse as Malbak and Foodcorp sold in line with Sanlam's strategy to refocus on financial services.
However, the deal does not, at first glance, make much strategic sense for Fedsure, which paid a 10% premium on SAD's current market price of R24 a share. The company has an interest in private hospital group Netcare, which could allow for some consolidation in drug procurements.
In the six months to end-February SAD's earnings shed 10% to 80.9c a share on a 5% improvement in turnover to R1.8-billion.
RESERVES RISE R1.9bn SA's gold and foreign exchange reserves covered the equivalent of three months' imports for the first time since 1981, after rising R1.9-billion to R32.8-billion in March. In US dollar terms, the reserves improved from $6.25-billion in February to $6.53-billion.
The surge in the reserves has been driven by strong foreign capital inflow for SA bonds and equities. In March, foreigners bought a net R13.2-billion in equities and bonds, more than sufficient to offset a $100-million IMF loan repayment, as well as Reserve Bank support for the rand.
Most economists expect further increases in the reserves, as demand for SA securities shows no sign of abating. However, once consumer spending picks up later this year, the demand for imports could put some pressure on the level of reserves.
Economists were also heartened by the Bank's further reduction of its net oversold foreign exchange position to $12.8-billion from $14-billion at the end of February.
NEW DIVISION OF PRIMEDIA While launching a new division - Primedia Entertainment - to its sprawling media and leisure empire on Friday, chief executive William Kirsh simultaneously announced the acquisition of two new companies to bolster the stable.
The first is a stake in Morula Pictures - a black production company owned by Mfundi Vundla, producer of soap opera "Generations" - and the second a 49% interest in Faizel Dajee's Reliable, which owns Your Music Warehouse and the CD City Warehouses.
SARHWU BUYS STAKE IN BANK Sarhwu Investment Holding, the investment arm of the SA Railways and Harbours Workers Union, has acquired an 8% stake in Mercantile Lisbon Bank for about R60-million. Sarwhu joins the bank's controlling consortium and plans to follow its rights in a R200- to R300-million rights issue at the bank later this year. The rights issue will precede a proposed JSE-listing for Mercantile.
KAROS'S TALKS TERMINATED Karos Hotels announced on Friday that talks about an investment in the group by Hilton Hotels have been terminated after the two parties failed to agree on terms of the deal. Hilton was to take a stake in Karos as well as run some of its operations. In a new cautionary notice, Karos said it was talking to other parties in the industry.
TOBACCO PRICES OPEN LOWER Tobacco farmers were shocked when Zimbabwe's annual tobacco auction opened this week with prices lower by as much as 40% than last year. While the industry expected prices to be lower than in 1997, when sales on the first day averaged $2.08/kg, there was widespread rejection of sales by growers when prices averaged $1.20c on the three trading floors.
Prices on the first days are seldom a reliable guide to seasonal trends, but so drastic a decline points to price levels well below those expected in the industry of close to $2. Prices peak in August when quality leaf comes to the floor.
Officials say Zimbabwe earned $433-million from last year's 186-million kilogram tobacco crop and expect slightly more from this year's 205-million kilogram crop.
CONSTRUCTION BODY FORMED After three years of negotiation, members of the construction industry have agreed to form a joint umbrella body known as the Construction Industries Confederation (CIC).
The founding members are the African Builders' Association, the Association of General Contractors, the Building Industries Federation of SA, the National African Federation for the Building Industry, the National Association of Black Contractors and Allied Trades, and the SA Federation of Civil Engineering Contractors.
The chairman of CIC is Mandla Ndlovu and the vice-chairman is Naude Klopper.
CA RATINGS DISPUTES FIGURES CA Ratings has disputed the figures provided in the market share pie chart of the SA Ratings industry published on March 15 in our survey on Duff & Phelps.
CA Ratings states that the graph is misleading because it does not compare apples with apples in that it does not differentiate between solicited and unsolicited ratings. (It claims its total number of both ratings is 259). CA Ratings also believes that the SA figures of its international affiliate Standard & Poor's should be combined with its own to give a fairer picture. However, a new graph reflecting these considerations could not be drawn up as the different industry players tend to keep their figures under wraps. ý Reports by BT staff, Sapa-AP, Reuter