THE BOTTOM LINE
Long4Life wades boots and all into R3.9bn Rage footwear
What next for former Bidvest titan Brian Joffe? Perhaps Tekkie Town?
It was barely a month ago that deal-making dynamo Brian Joffe expressed his determination to quickly grow the market capitalisation of his new investment company Long4Life to R10-billion. So the proposed acquisition of footwear and clothing brand Rage for R3.9-billion – in a paper and cash deal – does not come as a huge surprise.
Long4Life – which is already in the specialist consumer space via its investment in Holdsport – needed a mega-deal to sustain market interest in Long4Life.It’s clear that some punters still remain wary of Long4Life, discounting the chances of Joffe emulating the rapid acquisition strategy that built the old Bidvest into such an imposing corporate beast.
The starkest difference between Long4Life and the old Bidvest is that the former is attempting to build scale rapidly with large transactions whereas the latter scaled up quickly by making regular small incursions.
Clearly Long4Life takes on more execution and strategic risk by pursuing assets with big price tags – but one needs to remember that Joffe learnt a thing or two about assessing deals during his more than 25 years at the helm of Bidvest.
The inferred earnings multiple for Rage might also be perceived as demanding – especially for a bargain hunter like Joffe. But the Rage vendors are taking a chunk of Long4Life shares as settlement, effectively securing an influential stake of nearly 23% on a three year lock-in.
Not only does the appetite for scrip underline the vendors’ belief in Rage’s better-than-average growth prospects, but also gives a well-informed thumbs-up to Joffe’s longer term strategy for Long4Life.
What next for Joffe we wonder? Perhaps Tekkie Town?