Something stinks at Premier

When Premier (JSE: PMR) first announced the acquisition of RFG Holdings, I didn’t particularly like the deal. I said as much at the time, raising a concern that it felt like a classic situation of there being no obvious reasons for the deal. Simply making a group bigger isn’t a good reason to do M&A, as empire building has been a source of value destruction in many local and global deals over the years.

Destroying shareholder value is one thing, but destroying a community is quite another. I don’t often find myself on the same side as unions, but this time feels different.

You’ll find my opinion in Ghost Bites below, as well as updates on a number of companies that released results yesterday.

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It might be because I spent several years advising on M&A and corporate restructuring transactions. Perhaps it’s because I’ve been in boardrooms listening to conversations ranging from high-quality deal analysis through to little more than ego dressed up as value creation.

Whatever the reason, I tend to be sceptical of large deals that appear to offer little in the way of synergies.

In my mind, the Premier - RFG Holdings deal went straight into that bucket when it was announced. These simply didn’t feel like companies that belonged together, with Premier offering a really steady business built around consumer staples (like bread) and an ability to keep extracting better margins over time, whereas RFG Holdings was more of a wild child with a seasonal offering.

Premier’s latest performance shows the value of their strategy, with HEPS up by between 22% and 32% for the six months to September. That’s a great outcome in a tough consumer environment. It’s a per-share metric, so it hasn’t been artificially boosted by the RFG deal that was paid for in shares.

But underneath all this, Premier has decided not to reopen the Fruit Processing Western Cape factory in Tulbagh, a facility that has been part of the fabric of that agriculture community for many decades. They acquired this facility as part of the RFG deal, yet they’ve concluded that the global fruit-canning industry has been in “long-term decline” and has “dire prospects”.

Interesting.

It doesn’t sound like these dire prospects arrived since the RFG deal closed on 30 March 2026. There’s no talk here of Iran, or short-term dislocations.

I can’t help but wonder if part of the original deal thesis included an opportunity to cut some of the underperforming divisions at RFG. The argument around synergies always felt weak to me, so it would make sense if there were other factors at play, like cutting off the weaker operations to get to the attractive core.

But here’s the thing: the Competition Tribunal approved the deal in March this year based on no merger-related retrenchments being implemented for three years. Premier is trying to convince people that the closure is a result of the structural economic challenges affecting the industry. In other words, they want everything to believe that this decision is independent of the deal.

So, would RFG have closed the factory in the absence of the transaction? If these were such long-term issues, why didn’t they do it already?

And why did Premier buy a business if they believed the issues were already there, particularly since they had to give commitments to the regulators about job losses?

There are 424 directly affected employees. There’s an agriculture supply chain with many more people involved. There are labourers and farmers providing for their families every day.

I’m a capitalist at heart, but I’m also a citizen of a country that already has a huge unemployment problem.

I get very annoyed with the overreach that we often see from regulators. But in my opinion, preventing this from happening so soon after the deal wouldn’t be overreach - it would be exactly what the merger conditions are designed to do.

It’s rare that I find myself on the same side as the unions, but here we are.

With that rant out of the way, let’s move on to other company news.

Attacq’s (JSE: ATT) results for the year ended June reflect a delightful increase in the dividend per share of 17.2%. This was driven by a 7.0% increase in net operating income, as well as a 15.5% jump in normalised distributable income per share.

I have a position in this fund as I enjoy the precinct-focused approach vs. the spray-and-pray diversification that you’ll find in some of the biggest funds on the JSE. Here’s an example of the Attacq strategy at play:

The Mall of Africa’s turnover was up 7.7% for the period, giving us a strong reminder that high-quality retail assets are performing well in South Africa. The retail portfolio enjoyed overall positive reversions of 4.6%, while the office portfolio was only slightly negative at -1.1%. The logistics portfolio tends to have lumpy leases, so a spike in negative reversions to -6.2% is likely due to timing more than anything else.

Guidance for FY27 is growth in distributable income per share of between 6% and 9%. This would be much slower than what we’ve seen in previous years, but there was no way that the growth of 20% or more was maintainable.

iOCO (JSE: IOC) is another one of my local positions. A company trading on a modest multiple that is willing to give free cash flow guidance (!) in the South African market gets an allocation in my portfolio. The latest trading statement has done nothing to dissuade me, with HEPS for the year ended July 2026 growing by between 37.5% and 50%.

More importantly, the guided range is 55 to 60 cents. The current share price is R4.00. That’s a Price/Earnings multiple of just below 6x. The share price is down 5.7% year-to-date due to broader risk-off struggles, but we all know that the investment journey isn’t a straight line.

I’m happy to see this kind of HEPS growth and I’m tempted to add more, while recognising that iOCO’s business model isn’t the exciting part of the tech sector.

Here’s another name in my value bucket: Accelerate Property Fund (JSE: APF). As part of the ongoing turnaround efforts, the company has agreed to sell the Cedar Square shopping centre for R630 million.

Interestingly, this doesn’t include the right to develop the available bulk. If the purchaser wants those rights, it will be a separate deal. For context, the bulk is valued at R169 million.

As for the property itself, the last valuation was performed as at 31 March 2026 with an estimated value of R643 million. The price of R630 million isn’t far off that value – and certainly isn’t nearly as discounted as the current share price would suggest.

I’ve watched my Accelerate shares fall all the way down to 52-week lows. It’s on my 52-week low shopping list, along with some of the other names on the JSE that have come under pressure.

Vodacom (JSE: VOD) has suffered a significant setback regarding control of Safaricom in Kenya. It’s not a good look at all for the Kenyan business environment, as the transaction to acquire a further 20% in Safaricom was closed on 30 June 2026 after achieving all approvals. But with a 15% tranche being sold by the Kenyan government, many questions were subsequently raised about the process followed.

It seems that there were enough questions to spook the courts, with the High Court of Kenya setting aside the 15% tranche. Those shares are being returned to the Kenyan government for now. But even more importantly, it means that Vodacom no longer has outright control of Safaricom.

They will appeal this, of course, but it’s a very unwelcome mess to have to deal with.

Selected Director Dealings:

Do your own research and speak to your financial advisor. Nothing you read or listen to in Ghost Mail should be interpreted as financial advice. This is not a complete review of SENS and does not replace the need for you to refer to company announcements and reports yourself. Every effort is made to avoid errors in Ghost Bites and related podcasts, but I am only human.

US markets closed lower overnight as oil prices rose on escalating tensions in the Middle East, and amid caution ahead of today's Fed rate decision. The Nasdaq led the decline, with additional concern over the pace of AI development as industry leaders warn of humanitarian and security risks. The 10 year Treasury yield touched its highest level since 2023, while the dollar firmed.

We are seeing a partial unwind of those moves this morning, with little fresh news to support the moves as of yet. US futures are modestly firmer and Asian equity markets trade mixed, although semiconductor stocks are firmer.

Oil prices are trading off yesterday's highs, as is the dollar index, though both remain elevated.

Markets appear to have fully priced in a rate hike at today's Fed meeting, and will look to the statement and press conference for further directional guidance. Ahead of the US open, markets will also watch retail sales and import data.

The rand is marginally firmer against the dollar after yesterday's sharp depreciation. The JSE All Share Index is expected to open flat to marginally higher, though this is likely to be tested as the session moves into the afternoon.

This update is provided by Shaun Murison, Senior Market Analyst at randswiss.com. Connect with him on LinkedIn here and follow him on X here.

Key Indicators: 

USD/ZAR R16.23/$ | US 10yr 4.99% | Gold $4,325/oz | Platinum $1,797/oz | Brent Crude $107.91