Mvela+to+buy+Johncom+stake,+Thom+McLachlan,+Business+Day



=**Mvela to buy up to 30% stake in Johncom media**=

Thom McLachlan, Business Day, 31 October 2007
Businessman and politician Tokyo Sexwale’s Mvelaphanda Group (Mvela) will buy a direct stake of up to 30% in Johnnic Communications’ (Johncom’s) media assets from its major shareholder, Allan Gray, according to an announcement made by Mvela yesterday.

Mvela said yesterday it had concluded talks to buy from Allan Gray — Johncom’s single largest shareholder — between 25,1% and 30% in the soon-to-be-listed operating assets, now under the name of Opco, for R1, 413bn. It had valued the company at R4,7bn, said Mvela CEO Yolanda Cuba.

Once listed, Opco would own substantial media titles including the Sunday Times, Sowetan and half of Business Day, as well as substantial entertainment assets. The replacement name proposed for Opco is Avusa and it is to be voted on by shareholders today.

Mvela said the figure for the stake would be adjusted according to whether net cash resources were over or less than R50m at the time of Opco’s listing.

An announcement to the JSE yesterday said Mvela had to acquire shareholder approval but had secured 40% irrevocable approval from Mvelaphanda Holdings. It said the deal relied on certain conditions, including separation of the media assets from passive investments, which included a 38% stake in Caxton, as well as sale of a 38,6% stake in M-Net and SuperSport to rival company Naspers.

Cuba said, though, that should Competition Tribunal approval of the M-Net-SuperSport deal be denied, the firm would continue to pursue the acquisition. She said it would engage with management on how to “delink” the Naspers deal from the listing of Opco, as envisaged by Johncom. This would not affect the deal price, said spokesman Johannes van Niekerk.

The news followed Johncom’s release of a statement announcing “termination” of empowerment talks on Friday.

Market watchers said it was “interesting” Mvela had decided not to take an empowerment approach and, if reports were true, had also agreed to forgo an empowerment discount, opting rather to take a direct investment in the company.

The acquisition would give Mvela “strategic influence” over the operating media and entertainment assets, Mvela said. It would also be able to veto special resolutions, according to analysts.

Johncom CEO Prakash Desai said the parties had been in talks since April on Johncom’s empowerment plans and this was an indication the empowerment process would take “more than one step to achieve”. The board would report to Mvela on issues relating to its operations as it would to any other shareholder.

Analysts agreed the deal meant Opco would at once have an empowerment stake on listing, without shareholders experiencing dilution. Mvela said Johncom management indicated there would be further empowerment talks after listing.

Cadiz African Harvest portfolio manager Rajay Ambekar said the deal gave Johncom “stability” through a committed shareholder that could protect it from a hostile takeover when it listed as Opco.


 * From: http://www.businessday.co.za/Articles/TarkArticle.aspx?ID=3033787**

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