Internationally, the news was abuzz yesterday with Square's $29bn acquisition of Afterpay. In the US, investors worry about revenue growth today and profits tomorrow. There's a general approach of "don't worry, the cash flows will come" when assessing these companies.
To be fair, Square is finalising the deal by issuing shares to the sellers, so the Afterpay vendors are effectively "paying" a really high revenue multiple for Square as well.
For those who don't know, Square is Jack Dorsey's other company that he founded after the venture capitalists pushed him out of Twitter. Jack is the CEO of both Twitter and Square. There's no denying that the biggest hippie in US boardrooms is a serious visionary.
Locally, RCL Foods announced that CEO Miles Dally will retire this year with effect from 30 November. Chief Operating Officer of the Food Division, Paul Cruickshank, will take over from Dally.
Other news worth noting is that AfroCentric Investment Corporation has finalised its acquisition of Exeltis SA, a business that it will integrate into its Activo Health vertical.
The lead story this morning could only be MTN, which has managed to extract cash from Nigeria and has achieved a significant court battle in its Middle-East operations. The telecoms giant is becoming a much less risky play.
The Foschini Group also gets a spot, with turnover growth that would be almost non-existent if the group hadn't bought Jet. When done well, M&A can be transformative for a business. When it doesn't work out, it can be rather embarrassing. Just ask Huge Group, which unfortunately only received offer acceptances for 1.9% of Adapt IT shares.
Finally, Orion Minerals has executed an option over the Okiep Copper Project in the Northern Cape. It's great to see junior mining coming through while the big players literally print cash. We need more of that.
If you missed out on Magic Markets yesterday, be sure to listen to Episode 36 here. I discussed the quick-service restaurant sector with my co-host Mohammed Nalla. Our focus was on whether food delivery models could disrupt the party for this industry.
Enjoy your Tuesday!
The Finance Ghost
