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JOHNCOM SEEN AS POSSIBLE CAXTON TARGET

Rumours surged yesterday that Caxton CTP Publishers and Printers’ next move, following shareholder approval for a doubling of its authorised share capital on Monday, may be to bid for media group Johnnic Communications (Johncom).
The approval is the first step to facilitating Caxton’s issuing shares for cash or to make an acquisition.
Caxton’s shares added 3% or 30c to RIO yesterday giving it a market capitalisation of R4,6bn while Johncom’s shares rose 1,8% or 60c to R33.90 showing the company is valued at R3.5bn. But Caxton is unlikely to be the only party circling Johncom. An analyst, who asked not to be named, said it would be surprising if there was not a deal involving Johncom by June, because Johncom’s cash-generating assets were undervalued. He said it was hard for new players to start greenfield businesses in the regulated media environment, and current low interest rates favoured deals funded with debt.
Johncom’s assets include the Sunday Times, Sowetan, Nu Metro Theatres, Exclusive Books and a 50% share in BDFM – the publishers of Business Day.
Johncom said last month that it was appointing advisers to help it secure appropriate empowerment shareholding.
One rumoured bidder is Hosken Consolidated Investments (HCI), owner of e-tv, and a consortium that would include prominent business men Cyril Ramaphosa, Mashudu Ramano and Phuthuma Nhleko. An offer from Johncom’s management is also a rumoured possibility.
But an empowerment deal may not involve more than 25,1% of Johncom’s shares depending on the financing available.
Johncom’s shareholding is in a state of flux as its parent company, Johnnic Holdings, announced plans last month to unbundle its 62,5% stake to its shareholders.
With various smaller shareholders, but no single controlling shareholder, Johncom could be targeted with a combined cash and share offer to shareholders by a group such as Caxton. Depending on the structure, this could see Caxton CEO, Terry Moolman who controls Caxton, emerge as the single largest shareholder of the combined group. Johncom owns 36,15% of Caxton.
A second analyst who asked not to be named said the cross share holding between Caxton and Johncom could not continue forever and Caxton’s increase in authorised share capital could mean there was a large acquisition on the horizon.
Either Johncom could take over Caxton or Caxton take over Johncom, but it seemed more likely that Caxton would be the acquirer.
At end June Caxton held R963m in cash and Johncom held RIOOm in net cash at end September.

Source: Business Day – Charlotte Mathews