There are quite a lot of cautionary announcements currently hanging over stocks on the JSE. I thought that I might spend a bit of time speculating (note: this really is speculation and not fact!) as to what some of these cautionaries may relate to.
Firstly, Business Connexion (BCX) went under cautionary about a year ago and then withdraw that cautionary during Q4:11. The talk was that the original cautionary was relating to Orange Telecos looking to acquire the Group as a platform into Africa.
Obviously this did not work out so well, as the cautionary was withdrawn and Orange Telecos apparently walked away.
Now, Business Connexion has put out a couple much-improved (though still not amazing) results since then and recently the share issued a cautionary over itself again.
My guess? Well, Orange Telecos has snooped around and found that Business Connexion is actually the best of a bad bunch of ICT firms on our JSE (Seriously, who would buy Gijima and its turnaround right now? EOH is just too hyped and expensive at present. And the rest are either too small or not sufficiently positioned for a telecos to be interested...) and the French firm is back at the negotiating table looking to take Business Connexion out.
Next up is Afrimat (AFT) and Infrasors (IRA) that are both currently under cautionary. I think these cautionaries are related and, as Afrimat has long been a consolidator in the industry, I expect it is more likely to be Afrimat buying some (or all?) of Infrasors assets to add to its portfolio.
Another construction-related counter, Protech Khuthele (PKH) has long been under cautionary as Eqstra (EQS) has steadily increased its stake in the Group. (See my previous thoughts on this - Of Digging Ditches & Takeovers).
I think this cautionary still relates to that potential takeover, but, as time goes on, the risk of Eqstra walking away becomes higher. Or, Eqstra is waiting for Protech's share price to collapse again and then it will bid? Or, or, or...
Whether the bid comes to the table or not, I still think the cautionary is directly related to that.
Then PSG's latest punt, Curro Holdings (COH) has gone under cautionary (again). While I am pretty certain that the private schools group will be doing (another) rights issue soon enough, the group has aggressive growth targets and has been throwing the cheque book at meeting them (i.e.: acquiring).
So, I think this cautionary is at least partly relating to another school acquisition. Where, when, what? Who knows, but as Curro gets more and more money in its coffers for acquisitions, there may be more and more millionaire head masters walking around in South Africa... Just food for thought.
Finally, Litha Healthcare (LHG) issued a cautionary earlier this week.
After the Group's Pharmaplan acquisition, introduction of Paladin Labs Inc. as a major shareholder and the appointment Andrew King (ex-Adcock Ingram and ex-Aspen Pharmacare) as Divisional CEO of the Group's Pharma segment, I don't think it is a major stretch of the imagination to see the Group looking at an acquisition in the pharmaceutical space.
The question is what, where and how much?
And to those questions, I have no answer.