Cape Town - The offer by Brait Private Equity to buy Shoprite Holdings could surge from R15 billion to R19 billion if R35 a share was found to be fair and reasonable, an analyst said on Friday.
Brait had initially offered R26 a share but later increased that to R28 a share, which drew the support of Allan Gray, a key investor, and the Public Investment Corporation (PIC).
But Shane Watkins of Peregrine Capital, speaking ahead of tomorrow's hearing by the Securities Regulation Panel on Absa Bank's valuation of Shoprite, said: "We strongly disagree that the initial offer was indeed fair and reasonable."
Watkins said Peregrine, along with Stanlib, Coronation Fund Managers and Polaris Capital, had demanded a second independent valuation.
Between them, the four institutional investors hold just under 20 percent of Shoprite.
Shoprite chairman Christo Wiese said people were fully entitled to disagree on value. "Shoprite is not reluctant to appoint anyone else to do a fair and reasonable valuation," he said. "They will have a bit of difficulty explaining how, apart from me, the two largest shareholders, Allan Gray and the PIC, have both accepted the offer."
Patrice Moyal, director of Visio Capital Management, which holds just under 1 percent of Shoprite shares, said Visio's contention was that Pepkor was delisted in late 2003, in a transaction orchestrated by Brait along with Wiese.
In October 2003 the offer was R10 a share. In December it increased to R11 and then R12. At the time, Absa carried out the valuation.
"We don't question their integrity, we just question whether the methodology they applied back then will be the same one they will apply here," Moyal said. Asked what he considered a fair and reasonable price, Moyal said it must be commensurate with the current rating afforded to Shoprite's peers in the market: R32 to R35.
Asked what price Peregrine was holding out for, Watkins said Darren Cohn from UBS had a valuation of R32.50 a share, while Rohan Dyer, an analyst at Barnard Jacobs Mellet, had a target price of R31 and was of the view that the value to a private equity player was more than R35.