EOH’s stock remains stagnant despite R1 Billion BEE transaction


Ayanda Mdluli

JOHANNESBURG- Technology Group EOH continued to take a knock in the markets despite yesterday’s major announcement of a R1 billion Black Economic Empowerment (BEE) deal with Lebashe Investment Group.

According to the company, the latest transaction will make EOH one of the largest technology groups in Africa.

Highlighting the specs of the deal, the company said it had agreed that Lebashe would make a R1 billion equity injection into EOH.

In addition, the issue price of EOH Shares will be at a 10% discount while EOH would also issue 40 million A Shares to Lebashe for a nominal consideration.

According to the company, the deal would significantly increase EOH’s effective black shareholding to above 50% as increase the initially proposed Lebashe equity injection from R250 million to R1 billion.

In a SENS announcement released yesterday, the company commented: “As a result, EOH and Lebashe have entered into a landmark BEE transaction within the Technology sector, which will make EOH one of the largest, majority black-owned technology companies in Africa. This long-term commitment aligns Lebashe’s interests with those of EOH’s current and future shareholders. The Parties have subsequently entered into binding long-form agreements to revise the initial terms of the Transaction as set out in the Announcement.”

However, the announcement of the landmark deal did not appear to move its position in the markets as it continued on a downward trajectory over the last seven days. Market indicators show that the share price of EOH dropped by 4.89%. From the year to date, its share price tanked by more than 41%. The stock currently stands at R41.02.

The transaction between EOH and Lebashe comes as the former recently appointed Stephen Van Coller as the new CEO of EOH. Coller, a former executive at MTN Group and the former head of Absa Group’s investment-banking division was appointed in mid-July to take over the running of the company.

Over the last few months, the technology company has been on a steady overdrive trying to clean up and improve its issues with corporate governance. It has also been desperately trying to turn around its performance after its stock fell to its lowest levels last seen seven years ago.