BED­FEL­LOWS PART WAYS

Finweek English Edition - - Companies & markets - BELINDA AN­DER­SON

IT SEEMS that the most likely out­come of the sep­a­ra­tion by John­nic Com­mu­ni­ca­tions (John­com) of its me­dia op­er­a­tions and its 37,79% stake in Cax­ton would be for Terry Mool­man’s com­pany to buy back the shares.

That’s the view of Cadiz African Har­vest fund man­ager Ra­jay Am­bekar, who says that given the com­pli­cated con­trol struc­ture con­cern­ing the bulk of those shares it seems un­likely there would be other in­ter­ested buy­ers.

In a move that CEO Prakash De­sai says would give the mar­ket and other stake­hold­ers in John­com greater clar­ity, the com­pany an­nounced it would spin off its me­dia op­er­a­tions into a sep­a­rate list­ing – tem­po­rar­ily called OpCo – and re­tain its Cax­ton stake in the ex­ist­ing listed en­tity.

In terms of JSE re­quire­ments for a list­ing to con­trol the ma­jor­ity of its as­sets, John­com would then have 12 months in which to de­cide on the way for­ward for that stake.

The an­nounce­ment comes shortly af­ter John­com con­firmed the ap­point­ment of De­sai (its for­mer fi­nan­cial di­rec­tor) to re­place for­mer CEO Con­nie Mo­lusi, who de­parted last year. De­sai would say lit­tle more than was con­tained in the an­nounce­ment on the Stock Ex­change News Ser­vice, other than that ad­di­tional an­nounce­ments would be made in due course.

He says John­com would en­gage with all stake­hold­ers, look at the var­i­ous op­tions and ob­tain ex­ter­nal ad­vice be­fore mak­ing any de­ci­sions on the Cax­ton stake.

John­com is wait­ing for Naspers to get the green light from SA’s com­pe­ti­tion au­thor­i­ties to buy its 38,56% stake in MNet and Su­perS­port be­fore im­ple­ment­ing its new strate­gic plan. Shortly af­ter list­ing OpCo, John­com will con­clude its long- awaited black eco­nomic em­pow­er­ment trans­ac­tion at that level.

Am­bekar says the split was the right thing for man­age­ment to do, given that af­ter the sale of its M-Net stake around 40% of John­com’s busi­ness would have con­sisted of an as­set over which it had no con­trol. The trans­ac­tion would un­lock value, Am­bekar says.

He says the split would also give John­com the op­por­tu­nity to look in­de­pen­dently at the long-term fu­ture of its lu­cra­tive print­ing con­tracts.

John­com says its busi­ness units would in­clude me­dia, re­tail, books and maps, home en­ter­tain­ment, Africa, mu­sic and dis­tri­bu­tion, man­u­fac­tur­ing and sup­port ser­vices. Prize news­pa­per as­set The Sun­day Times re­cently an­nounced it would launch a daily, The Times.

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