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STRANGE TWIST IN BIDDING WAR FOR NAIL

Johannesburg – In a strange twist of events, a consortium led by Johnnic Communications (Johncom) said yesterday it was the preferred bidder for the entire assets of New Africa Investments Limited (Nail).
Nail would not confirm this.

The consortium, which consists of Johncom, Kagiso Media and Caxton Group, said in a cautionary it had been named a preferred bidder and was in negotiations that could result in it making a firm offer.

Nail, however, did not mention the Johncom-led consortium when it also released a cautionary yesterday. Instead, Nail reiterated that the bidding process was progressing as contemplated. Nail did say it had received a firm offer from the Safika-led consortium, consisting of Tiso Private Equity Fund, Mineworkers’ Investment Company and Investec, to buy the entire company for R9 a share, or about R1 billion.

Johncom-led consortium members were not willing to comment, and said only that the process was at a sensitive stage and that they had signed a confidentiality agreement with the board of Nail. There was no confirmation or denial that the bid from Hosken Consolidated Investments had been ousted by Nail’s board.
However, in yesterday’s trading update Nail added that its earnings for the six months to June would rise more than 30 percent, compared with the same period last year.

Nail stock was untraded at R9.40 by 3.30pm yesterday but non-voting shares rose 30c to R9.80 on the earnings and Johncom news.

Harold Bopalamo, a media analyst at Barnard Jacobs Mellet Securities, said:

“For the Johncom-led consortium to pool resources rather than try to outbid each other is prudent.” He said the combination of Johncom, Caxton and Kagiso would ensure that the consortium gets Nail’s assets at a cheaper price than if Safika’s consortium were to win the bid and then sell the assets.

“The Johncom-led consortium could split the assets among each other at a later stage if the bid was successful,” he said.

Johncom, the owner of Business Day and the Sunday Times, already owns 50 percent of the Sowetan Sunday World and 33 percent of Allied Publishers, in which Nail and Independent News & Media also have a stake.

Kagiso Media has investments in Nail’s assets, such as Radio Jacaranda, and an equity stake in Radmark, the radio sales house, while Caxton has its printing business and The Citizen newspaper. If the Johncom-led consortium did manage to acquire the assets of Nail it would be a coup for Kagiso and Johncom. Saki Macozoma the chief executive of Nail, tried unsuccessfully to acquire Kagiso and Johncom in the past year.

Source: Business Report – Gugulakhe Masango