We’ve covered South African appraisal rights before – it remains a jurisdiction with active valuation and appraisal disputes making the news. One recent news article recaps a situation involving South African appraisal in the case of Sabvest Capital/Sabcap.
Per the article, and this filing, “Sabcap” acquired all the shares of “Sabvest” in exchange for Sabcap shares via a scheme of arrangement. (For US readers, a scheme of arrnagement can be understood to be a form of merger of acquisition but involving additional steps).
South Africa provides appraisal rights under Section 164.
Certain Sabvest shareholders demanded appraisal, requiring a Court to determine the fair value of Sabbest shares. Petitioners/Applicants initially set out that R69,21 (~$4.75 USD at current exchange rate) represented the fair value per Sabvest share. They referenced the published NAV of Sabvest shares of R66,89 (~$4.50) as a point in favor of their valuation.
Sabvest/Sabcap responded that Sabvest was worth either R30,00 (~$2.05) or the 30-day Volume Weighted Average Price of R33,67 (~$2.30). Sabvest/Sabcap apparently offered R33,67 in settlement.
We can view this as the ‘bid-ask’ spread in an appraisal negotiation. Both parties having set out positions with a significant spread: about R39,21 (~$2.70).
The parties ultimately resolved the matter, again, per the article and filing, with the vast majority of shares settling for R47,54 (~$3.25). This is close to, and only slightly under, the midpoint of petitioners demand and Sabvest’s offer.
South African appraisal remains an active area of appraisal and we look forward to covering issues in the future.