Public markets are a means, not a virtue. A listing is optional; value creation is not. A stock exchange listing is not a moral achievement; it is a financial instrument. If it provides liquidity, price discovery, and access to capital, it earns its keep. If it does not, it becomes an expense masquerading as prestige.
Academic literature has long recognised this. Macey, O’Hara, and Pompilio (2008) frame listing and delisting as a cost–benefit trade-off.
When the costs of remaining listed exceed the benefits, voluntary delisting can be rational — even optimal — though it remains subject to regulatory oversight due to the implications for liquidity and investor protection.
This is not theoretical. When National Foods listed on the Victoria Falls Stock Exchange in 2022, the promise was deeper liquidity, broader investor participation, and optional US dollar capital raising.
None of this materialised. Trading remained thin, investor participation was muted, and capital was not required. The listing failed the only test that matters: did shareholders receive value in excess of the cost of being public?
McKinsey’s valuation framework articulates the same logic more bluntly: when a persistent public-market discount is unlikely to correct through normal price discovery, a take-private transaction becomes economically rational.
In such cases, restructuring allows long-term investors to capture the gap between a depressed trading price and intrinsic value over time, rather than through the transaction price itself (Koller, Goedhart & Wessels, 2020). That is not market failure; that is capital discipline.
The rationality of delisting is only half the debate. The other half is pricing, and pricing in public markets is not a philosophical exercise. It is a market event. When a company exits, the market writes the cheque — not the spreadsheet.
In compulsory, semi-compulsory, and voluntary transactions alike, the only defensible settlement anchor is the unaffected market price: the level at which real buyers and real sellers transacted before the first cautionary announcement, before deal speculation, and before the transaction existed.
That price, typically expressed as a 30-, 60-, or 90-day Volume Weighted Average Price (VWAP), reflects actual risk capital deployed under normal trading conditions. It is observable, verifiable, and real.
From that benchmark, a premium is added — not to match a theoretical intrinsic value, but to compensate shareholders for three concrete economic concessions: the permanent loss of secondary market liquidity, the certainty of execution foregone by remaining listed, and the transfer of control and future optionality to the acquirer or continuing shareholders.
Intrinsic value may inform the narrative. It may explain whether the stock trades at a structural discount. But it does not set the cheque.
It cannot, because it is assumption-driven, model-dependent, and inherently debatable. It is useful only for context, not settlement.
Michael Officer’s seminal 2003 study in the Journal of Financial Economics confirms this empirically: offer prices are anchored to pre-announcement trading prices. His methodology uses a 42-day window to establish the “unaffected” market price.
Alexandridis et al. (2010) similarly show that global takeover premiums cluster around 30–40 percent relative to trading prices in the US and UK Across markets and jurisdictions, the pattern is consistent.
Now, put that pattern into practice. The evidence from recent delistings is not merely illustrative; it is structurally consistent. Across jurisdictions, exit premiums are calculated against unaffected market prices — typically a 30-day VWAP — not against discounted cash flow models or net asset value estimates.
On the Johannesburg Stock Exchange, Barloworld’s exit consideration reflected an 83 percent premium to its 30-day VWAP. Bell Equipment followed at 82 percent, Sasfin at 66 percent, and Astoria Investments at 31 per cent.
AYO Technology Solutions exited at a 30 percent premium, African Rainbow Capital at 21 per cent, Ascendis Health at 18 percent, and Anchor Group at 11 percent. In each instance, fairness opinions may have discussed intrinsic metrics, but the premium was explicitly referenced to trading prices — the observable VWAP — and not to internal valuation models.
The same construct applies in Zimbabwe. National Tyre Services voluntarily exited at a 15 percent premium to its 30-day VWAP. National Foods’ delisting from the VFEX was settled at US$1,71, a price explicitly tied to prevailing market levels despite the disclosure of net asset value information. In neither case was intrinsic value used as the settlement anchor.
This distinction is not cosmetic. Intrinsic value analyses are disclosed to contextualise whether the market reflects a structural discount or premium. They do not set the transaction price.
The settlement benchmark remains the unaffected trading price, with a premium applied for liquidity loss, control transfer, and execution certainty. Across markets and regulatory regimes, the pattern is uniform: VWAP anchors the premium; intrinsic value explains the background.
Applying the same logic to Econet, the circular discloses three reference points: an exit price of US$0,50, a premium of approximately 152 percent to the 30-day VWAP, and an intrinsic value estimate of approximately US$0,59.
The pricing construct follows established precedent. The US$0,50 settlement is anchored to observable trading levels and adjusted through a substantial VWAP-based premium.
The US$ 0,59 intrinsic estimate is disclosed to illustrate that the prevailing market price may embed a structural discount; it does not redefine the settlement mechanism.
To price the exit at intrinsic value would represent a fundamental departure from public-market norms. It would shift pricing from an observable, verifiable benchmark to an assumption-driven model and would require crystallising uncertain forward value immediately.
Public markets do not settle on aspiration; they settle on price.
Precedent and regulation anchor exit premiums to unaffected VWAP, which reflects what investors were actually willing to pay before a transaction existed.
Intrinsic value may inform the debate, but it does not set the cheque. Econet’s exit follows the rule that governs every credible public-market deal: the premium is anchored to trading reality, not intrinsic valuation. That is not negotiable; that is market discipline.-herald
