Novus Holdings, a listed printing and packaging firm, final week shocked buyers by saying it was making a bid to purchase expertise distributor Mustek.
Novus has quietly been constructing a place in Mustek, and on Friday revealed that it had acquired greater than 35% of the tech agency’s fairness, requiring it underneath South African regulation to make a compulsory provide to different shareholders.
Novus, which is led by CEO André van der Veen, confirmed it can now just do that by providing different Mustek shareholders:
- A money consideration of R13/share (under the closing worth on Thursday of R13.67/share); or
- A money quantity of R7/share plus one peculiar share in Novus for every Mustek share held; or
- Two Novus shares for every Mustek share tendered.
Typically approaches similar to this one consequence within the goal agency being delisted. However Mustek CEO Hein Engelbrecht, who has stated he gained’t promote his shares, advised TechCentral by telephone on Friday that the intention is for the corporate to stay listed on the JSE.
Engelbrecht, Mustek MD Neels Coetzee and the DK Belief – a belief created by late Mustek founder David Kan – have stated they won’t settle for the necessary provide from Novus as they want to stay invested. They do, nonetheless, help the transaction and collectively maintain 11.7 million Mustek shares, or 20.3% of the overall.
However why is a printing and packaging firm, which not too long ago purchased a number of neighborhood newspapers from Media24, desirous about a expertise firm. Some analysts TechCentral spoke to on Friday expressed shock on the transfer, saying there isn’t a actual apparent synergy between the businesses.
TechCentral editor Duncan McLeod requested Van der Veen concerning the rationale for the proposed deal, and the way it took place (the dialog has been edited for readability).
Duncan McLeod: Why does Novus need to purchase Mustek?
André van der Veen: In these sorts of issues, you’ll be able to at all times attempt to craft some type of motivation about synergies, however I’m not going to do this. There are some contact factors with Novus and Mustek, primarily on the training aspect, as a result of they do lots of training coaching. However [the main reason is] I’ve recognized Hein [Engelbrecht] for 25-odd years or extra. And once we seemed on the Mustek share worth, it appeared to be good worth, and it has a trusted administration group that’s been round for years. And for Novus, a few of our shareholders have been encouraging us to do transactions to make Novus extra of an funding holding firm.
So, when this chance arose, we stated, ‘Okay, perhaps that is the chance that we are able to use to diversify. We aren’t diversified for the time being; we have now training and printing, though we do print for our training enterprise. So, once more, there’s some synergy there, however I don’t suppose the deal is being pushed by synergies.
I believe it’s only a good funding alternative, a chance to work with a administration group that I do know and have trusted for a few years. It’s a model that’s actually entrenched in South Africa. We like working with good administration groups, and we predict that we are able to add some worth – and it’s an funding alternative for us.
DM: So, will this be the primary of various offers as you look to grow to be extra of an funding holding firm?
AvdV: We’re opportunistic buyers. We don’t have a sector view, or something like that. If a chance to purchase an asset arises, the talk is whether or not we must always put it in Novus or not. There was a view that Mustek is a large enough asset for us to place into Novus, and it’s a steady asset, and what we have now in Novus are property which are steady and in a very good market place, and so forth. So, would we put an asset into Novus that has an unbelievable danger profile, was in an trade which we don’t suppose would go well with Novus shareholders? No. However this asset, I believe, simply by its nature and the time that it’s been round and its place out there, does go well with that kind of profile.
DM: I haven’t interrogated the share elements of the provide, however simply wanting on the money consideration of R13/share, it appears to be like a bit low. Are you going to must up your provide to get this over the road?
AvdV: The way in which the laws work in South Africa is, when you purchase greater than 35% of a enterprise, you then’re obliged to pay the very best worth that you just paid for the shares within the previous six months, which was R13. So, to entice shareholders who need to promote their shares, however who really feel the value is just too low, we’ve provided another, which is you may get two Novus shares for each Mustek share you personal.
So, in broad phrases, the Novus share worth was buying and selling at round R8 once we made the provide. As a Mustek shareholder and also you need to promote, you’ll be able to take R13 in money, or you’ll be able to elect to obtain two Novus shares, which most likely will get you nearer to R16. And even R13 is way increased than Mustek has been buying and selling at for the previous 12 months.
However we’re not saying, take the provide or don’t take the provide. We’re fulfilling our necessary necessities in accordance with the Firms Act. We additionally suppose it’s enticing for shareholders in the event that they wished to swap into Novus shares: they’ll promote down Mustek, however not utterly, and take part in a broader portfolio of property fairly than simply being uncovered to Mustek.
DM: I perceive that you just plan to maintain Mustek listed.
AvdV: We need to preserve it listed, sure. We don’t need to drive shareholders out or something like that. If you wish to keep in and keep a Mustek shareholder, we’re very comfortable that you just try this. If you wish to swap it into Novus, we’re very comfortable to do this – and can even pay money.
DM: Do you concern new Novus shares to conclude the transaction?
AvdV: Sure, we’ll swap a Mustek share for newly listed Novus shares.
DM: What does the Firms Act say relating to necessary affords for this to proceed? Do a sure proportion of the shareholders must vote in favour?
AvdV: We already personal greater than 35%. We’ve got no minimal requirement. We’re obliged by way of the Firms Act to make the provide, however there isn’t a minimal acceptance stage or something like that.
I believe the intention of the act is that if there’s a brand new important shareholder in an organization, it’s essential to give minority shareholders the chance to promote their shares at a worth to allow them to make a alternative whether or not they need to keep in with the brand new shareholder or not. It’s a procedural matter greater than the rest, and there aren’t any minimal necessities. – © 2024 NewsCentral Media
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