French entrepreneur Vincent Bolloré is exiting Africa’s logistics sector due to some profound changes affecting it. This week, we examine the reasons for Bolloré’s exit and what it means for the stock Bolloré Transports & Logistics.
Capital News Africa: From the Trading Floor – Week 19-2022
Vincent Bolloré is one of France’s most uncompromising entrepreneurs. He became well-known for raiding undervalued companies, unfriendly takeovers and feuds with other entrepreneurs. He also is known to take a hard line on jobs and other personnel costs at the companies he acquires.
Bolloré stands for no less than the rise of aggressive capitalism in France - a fact that does not sit well with some in France. Indeed, an NGO calling itself “Stop Bolloré” has been formed that aims to thwart him and his activities. They criticise the concentration of power that they believe has formed in Bolloré's hands.
But let’s look at Bolloré’s history in Africa: In 1986, he acquired industrial conglomerate Suez die Société Commerciale d’Affrètement et de Combustible (SCAC) and used it as a base to build Bolloré Africa Logistics, one of the biggest in that sector. Bolloré Africa Logistics’ portfolio includes 2,700 kilometres of railway, three rail transport companies, stakes in 42 sea ports, 16 container ship terminals and seven freight train terminals.
The company, under the name Bolloré Transports & Logistics (ISIN: CI0000000261), is also traded on the BRVM exchange in Abidjan. Its market cap totals FCFA 114 billion (EUR 174 million). But don't get confused. Bolloré Africa Logistics and Bolloré Transports & Logistics are the same company.
Bolloré Transports & Logistics is 84.7% owned by Holding Bolloré SE (ISIN: FR0000039299). The logistics division also accounts for 37% of annual sales reported by Vincent Bolloré’s holding firm.
Vincent Bolloré celebrated his 70th birthday in April. In mid-February, he turned over management of his holding company to his two sons, Yannick and Cyrille. As part of the transition, Bolloré also announced that he would sell his stake in Bolloré Africa Logistics to MSC, a Swedish-Italian firm controlled by shipping magnate Gianluigi Aponte.
The deal values Bolloré Africa Logistics at no less than EUR 5.7 billion - or almost three times the company’s sales for 2020 (EUR 2.1 billion). Up to 20,000 employees at Bolloré Africa Logistics are affected by the deal.
Analysts give several reasons to explain the sale of Bolloré Africa logistics. They include:
It’s likely that all of these reasons played a role in Bolloré’s decision. The last two reasons given would have, by themselves, not been decisive.
It is in any case a fact that the sector is experiencing huge growth. Many of Africa’s sea ports are running well over capacity and must be expanded. New rail lines are also needed as well as new container terminals, warehouses and dry ports for goods transported by land. To take advantage of such growth, firms like China Merchants Port Holdings or Dubai-based DP World are expanding their business aggressively. For example, China Merchants Port acquired the ship container terminal Doraleh in Djibouti.
As a result of the sale to MSC, investors are asking themselves what will happen to the share Bolloré Transports & Logistics. MSC should gain a majority stake, though it’s not clear whether Aponte can get complete control of Bolloré Africa Logistics. This is because various governments in western Africa are not enthused by the deal and could impose certain conditions for Aponte’s full control of the firm. Naturally, the share’s fate depends on this too, as Aponte could opt to take Bolloré Transports & Logistics private.
The share itself has lost around 18% since the beginning of the year to trade at FCFA 2100 (EUR 3.20) on the BRVM. Holding Bolloré SE also is down 6.8% since January to EUR 4.59. It seems that investors are very uncertain about the future of Vincent Bolloré’s empire.