Reba Tech (REBA) sells computer software packages, including license renewals and provides clients with online support....

    
 

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Reba Tech ("REBA") sells computer software packages, including license renewals and provides clients with online support. The company was founded by Reba Masole, who has since retired and is no longer involved in the daily operating activities of REBA Jika Ltd. (JIKA) is one of REBA's biggest competitors and part of JIKA's strategic plan is to expand in Southern Africa, sharing a common vision with REBA. JIKA has started negotiations with Reba's youngest daughter, Lebohang Masole, in an effort to successfully take over REBA. Reba Masole, is not keen on handing her family's heritage to outsiders. Therefore, she proposes repurchasing the shares at a 10% premium above the share's market price as an anti-takeover strategy. This repurchase will take the form of a specific repurchase and the 10% premium is certified as being reasonable by an independent valuator. REBA's board of directors consists of six directors, with one being an independent non- executive director, agreed with Reba Masole that the integrated reporting requirement of King IV applies to listed companies on the JSE main board but sees no need for Reba to disclose one. As part of REBA's growth strategy, they aim to list on the Johannesburg Stock Exchange Main board within the following 12 months. REBA is currently an ALTX listed company. The Board made the following resolutions in a prior meeting in relation to the financial analysis for REBA: Resolution 1: The Market price for one share is valued at R26.05 and the target debt to equity ratio is 35:65, which is in line with the average capital structure in the IT industry. Reba Tech ("REBA") sells computer software packages, including license renewals and provides clients with online support. The company was founded by Reba Masole, who has since retired and is no longer involved in the daily operating activities of REBA Jika Ltd. (JIKA) is one of REBA's biggest competitors and part of JIKA's strategic plan is to expand in Southern Africa, sharing a common vision with REBA. JIKA has started negotiations with Reba's youngest daughter, Lebohang Masole, in an effort to successfully take over REBA. Reba Masole, is not keen on handing her family's heritage to outsiders. Therefore, she proposes repurchasing the shares at a 10% premium above the share's market price as an anti-takeover strategy. This repurchase will take the form of a specific repurchase and the 10% premium is certified as being reasonable by an independent valuator. REBA's board of directors consists of six directors, with one being an independent non- executive director, agreed with Reba Masole that the integrated reporting requirement of King IV applies to listed companies on the JSE main board but sees no need for Reba to disclose one. As part of REBA's growth strategy, they aim to list on the Johannesburg Stock Exchange Main board within the following 12 months. REBA is currently an ALTX listed company. The Board made the following resolutions in a prior meeting in relation to the financial analysis for REBA: Resolution 1: The Market price for one share is valued at R26.05 and the target debt to equity ratio is 35:65, which is in line with the average capital structure in the IT industry.

Answer rating: 100% (QA)

1 Describe how the suggested repurchase of shares will assist REBA with its antitakeover strategy The suggested repurchase of shares at a 10 premium above the market price can assist REBA with its ant... View the full answer