(Bloomberg) -- Barloworld Ltd.’s shareholders rejected a takeover plan by Saudi Arabia’s Zahid Group, triggering a standby offer.
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Zahid Group offered to buy all the shares of the South African company at 120 rand apiece, valuing it at about $1.25 billion. The stock declined 1.8% to 104 rand at 11:53 a.m. in Johannesburg Friday.
The deal failed to get the majority needed to pass, triggering a standby offer, the distributor of Caterpillar Inc.’s equipment in Africa said in a statement. The standby offer announced Friday sees Newco wanting to purchase the shares for the same amount.
Zahid’s Gulf Falcon Holding Ltd. and Entsha Ltd., an entity linked to Barloworld Chief Executive Officer Dominic Sewela, announced the initial offer in December. At the time, the bid was a 30% premium on the day’s closing price. The Saudi group started accumulating shares five years ago and holds a 19% stake.
Among the shareholders that rejected the initial deal was the Public Investment Corp., which oversees about 3 trillion rand ($162 billion) in South African government-pension funds and holds 21.97% of Barloworld’s shares.
The PIC is “concerned with corporate-governance standards at Barloworld and the steps its board followed in considering the transaction in question,” it said in a statement, adding it had held “robust engagements” with the board and that it’s open to more talks.
The money manager said the current offer “still presents” a premium to both Barloworld’s fair value and its pre-price offer, and is in the range recommended by Rothschild, which acted as an independent valuer.
London-based investor Silchester International Investors LLP, which holds close to 18% of the company — said previously it would reject any price below 130 rand a share.
--With assistance from Khuleko Siwele, Ana Monteiro and Gordon Bell.
(Updates with rejection by PIC in fifth paragraph.)
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