Ellies has just announced acquiring the option to acquire 100% of Namibian-based Power Line Africa ("PLA") within the next 15 business days for a total sum of R250 million.  Depending on profit achievements, the purchase price could go as high as R300 million, but in any event that the option to acquire is excersised it will be settled by Ellies half in cash and half in its own shares at 200c per share.

The SENS explains how PLA "...manufactures and installs high voltage transmission lines in Namibia, Mozambique, The Democratic Republic of Congo, Tanzania and Zimbabwe. Megatron Federal, which is housed in the Ellies Power division of the company, has worked and works with PLA on projects in Africa outside South Africa. The acquisition of PLA would offer Ellies cross-selling opportunities and synergies in the streamlining of engineering, site establishment and project management costs on various power related projects in Africa."

Besides the obvious synergies stated above, what is interesting about the agreement is the issuing of ELI shares at 200c each and the effect of change in the Group's pro-forma tangible NAV per shares.

The first point is interesting because it is at a price that Ellies has done a number of actions at.  Amongst other actions doen by Ellies using its script at this price, the recent rights issue was at 200c per share..

This 200c price used for ELI script comes favourably to the current share price hovering around 190c and versus the my rough fair value for the share at around 230c to 250c (buy report here).

Overall, a very interesting announcement from a continuingly interesting company.

Following from last week's article on the "Best of the Worst" penny stocks, I decided to pick a couple of the more promising (or controversial) small caps and run the same vote on them.  The selection was limited and by no means representative of the vast numbers of small and mid caps out there, but I tried to get a good spread.

It was quite interesting to see the results:

Personally, I think Vox is operating in a highly competitive market with increasing numbers of competitors and / or substitute goods that it is competing with.  The business is sound enough, but the market will erode the Group's margins over the long-term.

On the other hand, I agree with the next couple of placings...

PSG's agri-investment vehicle, Zeder, came second with just over 15% of the votes.  The Group has performed well after its recent rights issue and is up over 40% in the last 12 months.  A DY of 3.5% and PE of 8.93% show a confident market while retain some value in current levels.

The recently Main Board transfered gold miner, PAN, and AltX's ACTowers came tied for third place with just under 13% of votes each.

On the verge of bankruptcy that hangs dependent on Eskom's discretion, it is of little wonder that IPSA came last with not a single vote.