Ellerines and African Bank: Suitable Suitors? Part A

Author :

Dr Odongo Kodongo, Claire Beswick and Helen van den Berg

Pages :

19 pages

Product Type :

Case

Reference # :

WBS-2015-09

Teaching Note :

Not available

Institute:

Wits Business School, University of the Witwatersrand

Setting:

South Africa

Year:

2015

Keywords:

Finance, Corporate Finance, Mergers and Acquisitions

Summary/Abstract:

At the end of the third quarter of 2007, Leon Kirkinis, chief executive officer (CEO) of African Bank Investments Limited (ABIL), unexpectedly arrived at the head office of Ellerine Holdings Limited (EHL), a South African furniture retail group, with a proposal to purchase EHL. For some time, EHL, which derived a substantial portion of its profit from loans provided to customers wishing to buy furniture, had been looking to enter into a deal with a bank as a means of growing its business. Up until the ABIL offer, EHL had been seriously considering a joint venture with Capitec Bank. Now, EHL’s CEO, Peter Squires, and the EHL board had to decide which route to choose.