Value trap unlock play Libstar keeps market in suspense as buyout talks drag on

Key topics:Libstar shareholders urged to stay put amid ongoing deal talks.Recent asset sales hint at a possible full buyout or delisting.Private equity interest could push share price above current levels..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..BizNews Reporter.Shareholders of Libstar Holdings, the owner of Lancewood dairy and Denny mushrooms, have been told to sit tight once again. In a Further Cautionary Announcement released this morning, the food producer confirmed negotiations regarding a potential corporate action—first flagged to the market on 10 December 2025—are still ongoing.While the concise SENS announcement offered no new specific details, the mere fact of its renewal confirms that the talks have not collapsed. For a company that has long been labelled a "value trap" by frustrated investors, this extended silence is deafening—and potentially lucrative.The "For Sale" Sign is FlashingThe renewal of the cautionary suggests that a deal of significant consequence is being thrashed out behind closed doors. In the parlance of the JSE, this usually points to one of two things: a major asset disposal or, more likely given Libstar's recent history, a full buyout and delisting.Libstar has been a prime candidate for a "take-private" transaction for years. Since its listing in 2018 at an offer price of R11.00, the stock has been battered by a perfect storm of weak consumer spending, load-shedding costs, and margin compression..Read more:.Harnessing the power of private equity for economic gains.Trading at R4.65, the counter is languishing at a massive discount to its intrinsic value. With a net asset value (NAV) historically pegged well above R8.00 per share - our intrinsic value estimate is R8.19 -, the public market is effectively valuing the business at around half the worth of its parts.Cleaning House for a Suitor?Speculation has been rife that Libstar’s recent aggressive "portfolio simplification" was a precursor to a sale.Over the last 12 months, management has ruthlessly cut non-core fat. The disposal of its fresh mushroom farming operations (while keeping the high-margin Denny brand) and the exit from its Household and Personal Care (HPC) business were classic moves to tidy the balance sheet.By stripping away the capital-intensive and lower-margin divisions, Libstar has morphed into a leaner, more attractive target for private equity.The Private Equity AngleThe "smart money" is betting on a buyout by a consortium involving existing major shareholders. Avenir Capital, which already holds a significant stake, would be the logical driver of such a move.For private equity players, the math is compelling: buy the company at a premium to the current share price (say, R6.00 - R6.50), which is still a bargain relative to the replacement cost of its assets (Lancewood alone is a jewel in the SA food crown), and then sweat the assets away from the glaring scrutiny of the JSE.What Now for Shareholders?For now, the board's advice is standard but critical: exercise caution.If a firm offer is on the table, it will likely come at a premium to the current trading price. Selling now risks leaving money on the table just before the "pop." However, if talks collapse—as they famously did for similar mid-cap counters in the past—the share price could rapidly retrace to its pre-cautionary lows..Read more:.Global equities have recently broken out to new highs – now what?.The clock is ticking. Under JSE rules, companies must update cautionaries every 30 business days. Investors can expect the next move—either a firm offer announcement or a withdrawal—by late February. Until then, Libstar remained one of the most-watched stocks in the food sector.

Value trap unlock play Libstar keeps market in suspense as buyout talks drag on

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