In the latest development in the controversial KWV control saga, the KWV board has announced it was taking legal advice on whether to appeal yesterday’s ruling by the Securities Regulation Panel (SRP) that KWV was obliged to treat UK drinks firm Halewood International as a bona fide offeror.

Treating Halewood as a genuine offeror would require KWV to provide Halewood with access to the data necessary for Halewood to formulate a firm offer to KWV shareholders.

The ruling followed months during which the KWV board refused to provide Halewood with the requested information. The KWV board argued that Halewood was not a bona fide offeror and therefore KWV did not have to provide it with access to any data. During this two-month period the KWV board was entertaining a R12 a share offer from Pioneer Foods.

Three members of the KWV board, chairman Thys du Toit, Jannie Mouton and Antonie Jacobs, have links with the broader PSG group, which includes Zeder Investments and Pioneer. Zeder held in excess of 35 percent of KWV until last weekend, when it sold 31 percent to Hosken Consolidated Investments (HCI).

Minority shareholders in KWV are concerned that these links may have influenced KWV’s decision not to provide information to Halewood.

At a KWV board meeting yesterday HCI’s Johnny Copelyn, Marcel Golding and Andre van der Veen were appointed as directors and Mouton and Jacobs resigned.

After the meeting KWV said: “The board is satisfied that there is no prospect whatsoever of any merger… between KWV and Halewood on the basis of the current suggestions by Halewood. The board has made this statement particularly in light of the fact that HCI has acquired more than 25 percent of the firm’s shares and has stated categorically that it will not favourably consider such a merger at this point.”

Halewood’s current tentative offer is based on an exchange of Halewood shares for KWV shares. Yesterday, KWV said that Halewood’s efforts “to avail itself of an alleged opportunity for equal access to competitively sensitive information about KWV appears inappropriate to the board”.

The SRP’s ruling requires KWV to comply with rule 16.4 of the securities regulation code and provide Halewood with the data by next week. Rule 16.4 requires that firms provide information equally and as promptly to “a less welcome but bona fide offeror”.

KWV minority shareholders welcomed the SRP ruling, stating that they should be allowed the opportunity to consider an offer from Halewood. They noted that issues of confidentiality could be dealt with in the manner they were always dealt with in merger negotiations.

Source: Business Report – Ann Crotty