Shares of Barloworld surge following Zahid Group’s buyout offer

---

Barloworld shares experienced a significant boost in value following the announcement of a buyout bid from Saudi Arabia’s Zahid Group.

The proposed offer, made public on December 11, 2024, values the South African industrial giant at 22.8 billion rand (approximately $1.3 billion), with Zahid Group’s Gulf Falcon Holding Ltd. offering 120 rand per share.

This bid represents a 30% premium over Barloworld’s recent market price, which has triggered a surge in investor confidence​.

The surge in Barloworld’s share price reflects the market’s optimistic response to the bid. Investors are keen on the promise of a strong return on their shares, bolstered by the substantial premium Zahid Group has put on the table.

Barloworld’s stock, which had been trading at a lower value prior to the announcement, saw a significant uptick in price almost immediately after the news broke​. This upward movement underscores investor expectations that the deal will proceed smoothly, despite potential obstacles such as shareholder opposition.

Zahid Group, through Gulf Falcon Holding Ltd., is seeking to acquire 100% of Barloworld’s shares, marking a strategic expansion into Africa’s growing infrastructure market.

The Saudi conglomerate, which already holds a 19% stake in Barloworld, is particularly interested in the company’s distribution of Caterpillar machinery across Southern Africa​.

The growing demand for heavy machinery driven by infrastructure projects across the African continent makes Barloworld an attractive acquisition for Zahid Group.

The 30% premium attached to the offer reflects Zahid Group’s recognition of the strategic value of Barloworld, and investors have responded positively to the proposed deal.

The increase in share price indicates that the market sees this acquisition as a win for Barloworld’s stakeholders, as Zahid Group’s financial muscle and regional expertise could provide substantial benefits moving forward​.

However, the deal has not been without its challenges. Some of Barloworld’s larger shareholders, including Silchester International Investors, have voiced objections, arguing that the offer price should be raised to 130 rand per share to better reflect the company’s long-term potential.

Silchester holds around 18% of Barloworld’s shares, and their resistance could play a crucial role in the outcome of the acquisition bid​. Despite these objections, the general market sentiment has been positive, with analysts speculating that a resolution may be reached, allowing the deal to move forward.

The rising stock price not only reflects investor optimism about the buyout but also highlights the growing trend of Middle Eastern companies expanding their influence in Africa.

As governments across the continent continue to invest in large-scale infrastructure projects, companies like Zahid Group are positioning themselves to benefit from the growth of these markets.

The acquisition of Barloworld would give Zahid Group a significant presence in Africa, allowing it to tap into the continent’s booming demand for construction machinery and other industrial equipment​.

If the deal is successfully concluded, it could pave the way for further Middle Eastern investments in Africa, reinforcing the continent’s strategic importance in global economic growth.

With Barloworld’s stock price rising and investors backing Zahid Group’s bid, the acquisition is poised to become a significant milestone in the ongoing economic development of both Africa and the broader Middle East.

Also Read

Warner Bros. Discovery stock surges as company announces major restructuring plans

Riot Stock soars as starboard value reveals stake