US private equity firm makes non-binding offer to acquire South Africa’s Metrofile

SOUTH AFRICA – Metrofile, a documents management and storage company, has announced that the Housatonic Consortium has submitted a conditional, non-binding offer, in terms of which it has indicated its intention to make an offer to acquire the entire issued ordinary share capital of Metrofile, by way of a scheme of arrangement.

The Housatonic Consortium intends to establish a new South Africa company for the purposes of implementing the proposed transaction.

Housatonic Partners is a private equity investment firm founded in 1994 with over US$1 billion in capital under management. The firm maintains offices in San Francisco and Boston and invests globally.

The company’s board had constituted an independent subcommittee to consider the offer for Metrofile’s entire issued share capital, it said. 

Metrofile reported a 5% increase in revenue from continuing operations for the financial year to end-June 2019. It attributed the rise to box volumes growing 5%, as well as the inclusion of acquisitions made in the prior year, with earnings before interest, tax, depreciation and amortisation.

Housatonic has offered to pay R3.30 (US$0.22) per share in cash, representing a 43.4% premium above Metrofile’s current share price.

Housatonic Partners seeks to invest in growing, profitable companies in the recurring business services, technology, and healthcare sectors. 

The firm has invested in five records and information management companies, including three led by Dennis Barnedt.

Barnedt, currently based in Australia and Ireland, has worked in six records and information management companies and founded three of those in partnership with Housatonic Partners.

These companies have all grown to be leading information management solutions companies in their respective markets of the Americas, Europe and Australia.

Barnedt continues to lead each of these entities as founder and director. These three companies employ over 5 000 team members and serve over 40 000 clients worldwide.

The proposal is not a firm intention to make an offer and certain pre-conditions apply.

The cash consideration represents a 126% premium to the 30-day volume weighted average price of shares as at 5 September 2019, being the day before the publication of the first cautionary announcement relating to the proposed transaction.

In addition, should an interim dividend be declared by Metrofile for the six months ending 31 December 2019, this would be paid to shareholders in addition to the cash consideration of R3.30 (US$0.22) per share.

The independent committee has appointed BDO Corporate Finance Proprietary as the independent expert.

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