South African document management company Metrofile announced that it has received a takeover offer. US document management giant Iron Mountain may also be interested in Metrofile, says Gryphon Asset Management portfolio manager Casparus Treurnicht.
Founded in 1983 and listed on the JSE since 1995, the company stores (and shreds) large volumes of sensitive documents on behalf of businesses and governments. In the past year, it managed more than 11 million boxes of documents. It also manages digital documents, which contributed 15% to its revenue.
Metrofile has 67 facilities in South Africa, Kenya, Zambia, Botswana, Mozambique and the Middle East. The Mineworkers Investment Company owns a 37% stake in it.
In the past year, its revenue rose by 5% to R913 million, but headline profit fell 29%. It has a net debt burden of R588 million.
The company said on Friday in an update to shareholders that it would establish an independent sub-committee of its board to assess the takeover offer.
A management buyout is a possibility – its share price has tanked by two-thirds over the past five years, and at these levels may look cheap to insiders.
But US document management giant Iron Mountain may also be interested in Metrofile, says Gryphon Asset Management portfolio manager Casparus Treurnicht.
“The company is a big international player and probably looking at expanding its foothold in South Africa and Africa.”
The 60-year old Iron Mountain, headquartered in Boston, has 225 000 clients across the world, and handles document management for 95% of the 1 000 biggest US companies. It has 1 400 facilities in over 50 countries, including in South Africa, where it set up shop in Midrand.
“With a market capitalisation of almost 200 times the size of Metrofile, this is a sensible and executable acquisition for them,” says Treurnicht.
“My only concern is whether the Competition Commission would authorise a transaction like this. It could result in anti-competitive behaviour. The industry is already consolidated and needs more competition.”
“More (American) companies are looking at opportunities in South Africa following the PepsiCo acquisition (offer) of Pioneer.”
In July, PepsiCo announced that it wanted to buy Pioneer Foods, which owns major brands like Sasko, Spekko, Liqui-Fruit, Ceres, and Bokomo, for about R24.4bn.
Metrofile’s share price jumped by 13% on Friday morning and was last trading at 187c.
Read from source fin24.com