Ellies in acquisition talks

Ellies Holdings cautioned investors on Wednesday that it is in negotiations about potential acquisitions in the solar and renewable energy sectors.

The company, which just days ago warned that it could soon be forced to cut jobs to ensure its continued financial viability, said it is “in negotiations with third parties with a view to pursuing certain potential acquisitions in the solar, uninterrupted power supply and renewable energy sectors”.

“These negotiations, if successful, may have an impact on the price of the company’s securities. Non-binding term sheets have been signed regarding potential targets and the due diligence processes with regards to one of the targets has commenced,” it said.

In July, Ellies blamed the shift by South Africans away from traditional satellite television services to streaming alternatives for plunging the business into a full-year loss. Revenue for the year to end-April 2022 fell by 10.8% to R1.08-billion, while headline earnings per share swung from a profit of 9.19c to a loss of 7.13c. It reported a loss after tax of R43.7-million, from a profit before of R45-million.

Read: Streaming killed the satellite star: now Ellies to pivot to solar, smart homes

“Due to the continued lower demand for satellite TV offerings, the group has decided to focus on repositioning and widening this category towards a product and service offering focusing on the smart home and internet of things (IoT),” it said in July. “The refocused strategy leverages the current Ellies offerings around alternative energy, connectivity, IoT and streaming products for the home and business, and the change in strategy necessitates a reorganisation of the business model. The group is further engaged in a process of considering potential acquisitions to accelerate this growth.”

Read: Ellies looks to cut jobs amid tough trading conditions

On Monday this week, Ellies said it would embark on a “formal consultation process” with employees under the Labour Relations Act”. It said in a statement that the process related to the “restructuring of certain operational functions”, blaming “constrained” trading conditions for the move.

Ellies shares were trading hands at 16c each shortly after noon on Wednesday, up 1c, or 6.7%, on the session.  — © 2022 NewsCentral Media

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