Bad marriage ends as tribunal allows Lewis to take pick of Ellerines spoils

What a sad end to a once-powerful household brand. Competition Tribunal chairman Norman Manoim did well when he summed up the last 15 dramatic years of Ellerines's life as it slumped from a powerhouse to an unprofitable victim of ill-considered over-trading in the furniture retail sector.

"Ellerines has been with us on a number of occasions before," Manoim said this week with appropriate solemnity. "It has been here once as a suitor, twice as a bride and, unfortunately, today it is before us as an orphan."

Manoim gave the tribunal's approval to the acquisition by Lewis of several Beares stores, one of the orphan's many subsidiaries.

It might be possible to plot Ellerines's steady demise since the late 1990s through its interactions with the competition authorities.

That process would also describe the turmoil in the industry over the period as players pursued a growth-at-any-cost strategy that resulted in the market becoming dangerously overtraded.

The numerous restructurings - including Ellerines's (suitor) merger with Relyant - did little to shelter the players from the obvious consequence of overtrading.

Ellerines's first appearance, in 1999 as a putative bride to the ambitious JD Group, was seen as a way of enabling founding brothers Eric and Sydney Ellerine to exit and of providing scope for the merged entity to close down outlets. The tribunal said "no".

No doubt shareholders in African Bank are wishing the tribunal had said the same 10 years later when the country's largest unsecured lender sought approval for the R9-billion takeover of Ellerines. Unfortunately, the tribunal gave the go-ahead for that catastrophic marriage.

This week Lewis told the tribunal it would save more than 360 "job opportunities" and create another 126 jobsat the Beares stores that it would acquire.

Vodacom and Yebo Yethu

THERE'S great news for shareholders of Vodacom's BEE equity scheme, Yebo Yethu. Fears that the more consumer-oriented termination rates, which deprive Vodacom and MTN of part of their egregious oligopoly profits, could lead to a cutback in much-needed dividends and in Yebo Yethu's share price performance have been laid to rest.

Tucked away in the notes near the bottom of its very long results announcement released this week, Vodacom revealed it had pumped - or rather, "advanced" - R600-million into a broad-based black economic empowerment entity called Innovator Trust. It appears that although Vodacom established Innovator Trust, it described it as "an independent entity that is 100 percent black-owned". Innovator Trust's mandate is to acquire Yebo Yethu shares and use the dividend yield from them to empower SMMEs in the ICT sector "through the provision of critical business skills".

There is no indication of how many Yebo Yethu shares have been bought so far, only that the "numbers are pretty small".

A spokesman for Vodacom said Yebo Yethu would announce "when/if any notable thresholds are passed".

One very independent Yebo Yethu shareholder said he welcomed the move, which has provided liquidity and support to the Yebo Yethu share. However, he did raise concerns about what might happen to the Yebo Yethu share price if the Innovator Trust withdrew from the market, before adding wistfully: "I wish they'd given our empowerment vehicle the R600-million facility."

Thembeka Capital and PSG

Also on the empowerment front, Thembeka Capital came one giant step closer to being unwound when shareholders approved all of the necessary resolutions at this week's meeting. The unwinding is expected to be completed in January.

Whatever its claim to being a black economic empowerment (BEE) entity, Thembeka Capital has never attempted to describe itself as a broad-based BEE vehicle. Its executive chairman, KK Combi, appears to have done very well out of it and no doubt PSG was able to claim some BEE credentials. It won't be a great loss to the broad-based BEE industry.

Its demise coincides with the Financial Services Board's decision to toughen up on its approach to the over-the-counter market, although the unwinding decision probably had more to do with PSG's ever-vigilant opportunism.

Naspers and Tencent

IT is difficult to know what to make of Naspers's share price valuation - whether it's going up or down. Tencent's results early this week prompted a brief slump in Naspers. Industry experts in Beijing said the disappointment around Tencent's third-quarter results reflected a mismanagement of analysts' expectations, rather than a change in the bullish outlook for the extremely valuable internet company.

On Friday, the Naspers share briefly breached an all-time high of R1 600, propelled by news of a proposed transaction involving e-commerce businesses in Brazil, Indonesia, Thailand and Bangladesh.

The executives who sold at a mere R1 200 just a few weeks ago must be feeling a little regretful.