Last year I did a small post on Mota-Engil Africa when it debuted on the Dutch stock exchange. While I never had any intention of investing in the stock I thought it was interesting because it is a good comparable to Conduril, (still) one of my biggest positions. Since getting a listing less than a year ago the stock price of Mota-Engil Africa has languished, hitting a low of €3.40 compared to an IPO opening price of €11.50.
The company has therefore decided that the listing in Amsterdam is a failed experiment and is offering to repurchase all shares at €6.1235. Mota-Engil SGPS SA (MESGPS), the largest shareholder slash parent company of Mota-Engil Africa is not going to tender their shares. With Mota-Engil Africa currently trading at €5.82 you can make a 5.2% absolute return when the transaction closes. The company will hold a shareholder meeting on 23 November and intends to complete the tender before the end of the year.
The €6.1235 offer is significantly above the €3.77 price the shares traded at the day before it was made public, and because MESGPS owns 82% of Mota-Engil Africa shareholder approval shouldn’t be a problem. In addition to this the deal is also supported by the second large shareholder with a 13% stake. This shareholder is going to exchange its stake for newly issued shares in MESGPS, so what remains is a float of just 5% that needs to be bought out. Effectively it’s a very small deal that shouldn’t hit any obstacles. The reason for the relative big spread is most likely the result of the low liquidity of Mota-Engil Africa. But who cares about liquidity when you can tender your shares in roughly two months time? I don’t.
Author is long Mota-Engil Africa