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ON THE SHELF FOR TWELVE

19 Jan General

LAST year business in the Cape could not have drawn to a close on a more intriguing note with so many segments of the local economy poised for significant events.

Perhaps it is events in Euroland that have prompted the captains of industry to hasten corporate activity to shore up businesses in case of a prolong recession (we won’t say ‘depression, at this delicate juncture); or maybe it’s just that so many sectors are well overdue a shake-up.

Let’s look at the individual sectors:

AGRIBUSINESS: The battle for Capespan looks set to be decided in 2012 with Total Produce plc, the Irish fruit marketing company, throwing a curve ball by hiking its stake in the Bellville-based fruit marketing company to 20%. That means PSG-owned agribusiness investor Zeder looks large and charge with its recently acquired 40% stake. But don’t write of industrial conglomerate Bidvest, which has fought hard to secure a 7% stake in Capespan by buying unlisted shares on the open market. Even though Bidvest – which already has significant logistics capacity at SA’s ports and airports – has not been blocked from doing a due diligence on Capespan, CBN would not discount the chances of Bidvest making an outright (and presumably generous) offer to buy out both Zeder and Capespan. Proposals to split up Kaap Agri will also be worth monitoring closely – especially the operational side of the business, which could become a target for a bigger agri-player (ie Senwes) or could itself start buying up smaller businesses.

LIQUOR: All eyes on Paarl-based KWV in 2012 to see whether new shareholders HCI (see separate story) can enjoy early successes in turning this iconic business to a more sustainable profit model. One suspects KWV will be launching a handful of new (non-grape) products in the course of the year, and maybe even secure a niche acquisition or two. Gut feel, though, is that a big acquisition is on the cards for Stellenbosch-based Distell – perhaps a deal that extends the company’s already impressive global reach. No doubt the low key brand war on the premium beer front between Cape Town-based brandhouse and the giant SABMiller will extend into the new year. Beer market shares at the end of this year could be telling with brandhouse’s frothy triumvirate – Heineken, Amstel and Windhoek – shaking up the natural order.

CLOTHING & TEXTILES: Recent developments at Seardel are most heartening, and 2012 should hopefully see further operational improvements at this clothing and textile conglomerate without new controlling shareholder HCI having to resort to any more drastic cut backs in operations. Seardel’s textile division looks like it has picked up a profitable thread, but the company’s clothing segment needs to show tangible evidence that it can trade in the black again this year. By the same token one hopes Brimstone’s House of Monatic can also stay on the profit track for 2012. One interesting development to gauge in the year ahead, is the fate of Rex Trueform’s last remaining clothing manufacturing operations. These were sold recently for R5 million to Pals Holdings, which presumably has use for spare production capacity.

FISHING: The sale of the Fernandes family’s Lusitania business to Oceana and the sale of FoodCorp’s Marine Products division to an empowerment consortium suggests the long awaited consolidation in the fishing sector is finally underway. Observers may be slightly surprised to see that neither Sekunjalo (owner of Premier Fishing) and Brimstone (owner of Sea Harvest) were not the first movers in this process. Gut feel though, is that both Sekunjalo and Brimstone will make moves in the fishing sector this year, the former perhaps adding to its increasingly impressive abalone operations and Brimstone perhaps looking to diversify Sea Harvest’s hake offering. To be honest, CBN still see merit in Brimstone and Premier looking at a merger of their respective fishing interests – but such things are always more complicated than they sound. Of course, Sekunjalo’s recent shift into ship repairs is a most fascinating diversion – maybe suggesting plans to form a broader marine cluster at the empowerment company.

GAMING: Obviously news of the second casino licence in Cape Town will be the big event in 2012. Suggestions are that a new casino will be positioned at the Waterfront, serving the high rolling tourism market. Tsogo Sun – with three Western Cape licences – looks like the front runner to shift one of its existing provincial licences to Cape Town, most likely the Mykonos casino. One might suspect Tsogo would want to hold as much of Mykonos as possible. This means a big clue to the second Cape Town licence developments will come if the gaming giant makes an offer to local investment firm Trematon for its significant minority stake in Mykonos (held through Club Mykonos Langebaan). Other key gaming developments in 2012 will involve Grand Parade Investments, which has indicated a willingness to shift away from its core gaming offering with a broader investment mandate. CBN reckons before GPI delve into new investments there might still be some action on the Limited Payout Machine front and online gaming. And what are the chances that GPI – headed by the tough as teak Hassen Adams – buys Sun International out of the Worcester casino and sets that casino licence in the running for the second Cape casino licence?

PROPERTY: Property development company Ingenuity made a surprise move in buying St George’s Mall landmark Newspaper House – which houses what’s left of the Independent Newspaper group – for R80 million at the end of 2011. Redevelopment plans are going to be most interesting to gauge with Wale Street/upper St Georges Mall precinct a much more vibrant part of town these days. So far Ingenuity will confirm that Newspaper House will be refurbished in its entirety and approximately 110 parking bays will be added.

A couple of other things are also on the boil. What will Cape Empowerment do now that its flagship Lion’s Hill project has been halted by the city council? Cape-based Vividend will no doubt continue to broaden its portfolio with new property acquisitions, while Mike Flax – the former prime mover behind Spearhead – will be getting to grips with an array of Cape-based properties held under Arrow Creek. Trematon’s new property venture will also be worth monitoring.

Source: Cape Business News