Ascendis Health has announced its intention to delist from the Johannesburg Stock Exchange (JSE) and repurchase shares from shareholders at 97 cents each. This decision aims to unlock value and enable more flexible growth strategies for the health and wellness group.
The company’s board has initiated the delisting process alongside a conditional offer to buy back shares using internally generated funds. Following the announcement, Ascendis’s share price rose by 13.4% to 93 cents in early trading.
The board believes that delisting is the best way to create further value for the company and facilitate strategic initiatives such as acquisitions and disposals. The current regulatory environment associated with being listed imposes constraints that limit the company’s ability to execute transactions that could drive meaningful value.
Strategic Review And Rationale
Ascendis Health conducted a thorough review of its strategic options, concluding that the listed environment, while beneficial for larger firms, presents significant regulatory and cost challenges for smaller companies. These constraints hinder the agility needed to pursue new business opportunities effectively.
CEO Carl Neethling highlighted that operating outside the listed framework would provide greater flexibility for growth and ultimately enhance value for stakeholders. The company has a robust pipeline of potential transactions that could benefit from a less regulated environment.
Shareholder Support And Approval Conditions
The proposed delisting is contingent on shareholder approval, and the majority of shareholders have indicated their support for the transaction. An independent expert review by Forvis Mazars Corporate Finance will assess the fairness of the offer. Approval is also conditional on acceptance by shareholders holding no more than 20% of the total shares issued by Ascendis.
Over the past two years, Ascendis Health has successfully turned around its operations, improving financial performance and establishing a strong growth foundation. The company’s previous debts have been eliminated, allowing it to fund the delisting through a combination of internal resources and borrowings from RMB Private Bank.
Leadership And Conflict Avoidance
To prevent any potential conflicts of interest, CEO Neethling and director Theunis de Bruyn have decided to recuse themselves from discussions and voting on the matter, while their associated shareholders will abstain from voting on the delisting.
Ascendis Health transitioned from a pharmaceutical conglomerate to an investment holding company in July 2024. This shift was designed to streamline operations, reduce overhead costs, and provide more ownership to the managers of its portfolio companies.
Previously, the company faced significant financial challenges, being on the brink of insolvency with a market capitalisation of less than R370 million. It is now valued at R518.6 million on the JSE, driven primarily by its medical portfolio, which supplies essential medical devices to both public and private sectors in South Africa. For the year ending June, the group reported an increase in headline earnings per share from 1.1 cents to 8.7 cents.