Ellies Holdings Limited Proposes Acquisition
On Wednesday, Ellies Holdings issued a warning to investors, stating that it was in talks about possible acquisitions in the solar and renewable energy industries.
The business, which only a few days prior issued a warning that job cuts may soon be necessary to maintain its financial survival, announced today that it is “in negotiations with third parties with a view to exploring some potential acquisitions in the solar, uninterrupted power supply and renewable energy sectors.
Ellies attributed the company’s full-year loss in July to South Africans’ switch from traditional satellite television services to streaming options. For the fiscal year ending in April 2022, revenue decreased by 10.8% to R1.08 billion, while headline earnings per share changed hands from a profit of 9.19 cents to a loss of 7.13 cents. It disclosed a loss of R43.7 million after taxes.
“Due to the continued lower demand for satellite TV offerings, the group has decided to focus on repositioning and widening this category towards a product and service offering focusing on the smart home and internet of things (IoT),” it said in July.
“The refocused strategy leverages the current Ellies offerings around alternative energy, connectivity, IoT and streaming products for the home and business, and the change in strategy necessitates a reorganization of the business model. The group is further engaged in a process of considering potential acquisitions to accelerate this growth.”
Ellies Holdings announced on Monday this week that it will start a “formal consultation procedure” with workers in accordance with the Labour Relations Act. The “restructuring of certain operational operations,” it claimed in a statement, was taking place as a result of “limited” trading conditions.
An independent expert must certify that the terms of the acquisition are fair to shareholders before a modest related party transaction can proceed without shareholder approval. The board of Ellies has requested a fairness opinion on the acquisition from PKF Corporate Finance Proprietary Limited (“PKF”). A copy of the fairness opinion is accessible at the company’s registered offices, and according to PKF, the acquisition is fair.
Shortly after noon on Wednesday, Ellies shares were trading hands for 16c each, up 1c or 6.7% for the session.