Caxton-Mpact tension peaks
ISSUES: ULTERIOR MOTIVES, TAKEOVER TUSSLE, VOTE AGAINST NON-EXECUTIVE DIRECTOR PAY
Caxton voted against several important resolutions at Mpact’s AGM.
Reporting on a statement distributed by JSE-listed Caxton and CTP Publishers and Printing via Sens on Friday – in reaction to a discussion when Mpact presented its recent results – necessitates disclosure that Caxton’s majority shareholders are also majority shareholders in African Media Entertainment (AME), the owner of Moneyweb.
Caxton has been trying to acquire control of Mpact for years, after accumulating an interest of 34% in the R4.3 billion packaging group. With 34%, Caxton is the largest shareholder in Mpact.
Ulterior motive
Caxton’s Sens announcement and its vote against Mpact’s executive remuneration at the latter’s AGM a few weeks ago make it clear there is little love lost between Mpact’s directors and its largest shareholder. The announcement was signed by Caxton chair Paul Jenkins.
It stated: “Mpact CEO Bruce Strong told investors at the company’s interim results presentation on 10 August that despite attempts to engage with Caxton in order to understand its reasons for voting down non-executive directors’ remuneration at the recent Mpact AGM, the Mpact board has been unable to find common ground with Caxton, because Caxton’s ‘conduct is underpinned by a different motive’. The inference is clear: according to Mr Strong, Caxton is acting improperly and contrary to the interests of Mpact, for its own ulterior purposes.”
Jenkins said Caxton takes issue with Strong’s statement and denies it. “As the largest shareholder in Mpact with a 34% shareholding, having invested some R700 million in Mpact shares, Caxton is vitally interested in Mpact’s success.
“Far from having an ulterior motive, Caxton’s stated intention to acquire control of Mpact has been met with inexplicable hostility, not only from Mpact, but also from Golden Era, which is Mpact’s competitor, major customer, co-accused in a cartel case which has been under investigation by the Competition Commission since 2016, and more recently a 10% shareholder in Mpact,” added Jenkins.
Takeover
The argument started following a seemingly innocent question last week when Mpact announced its interim results for the six months to June. Anton Smit, analyst at Peregrine Capital, asked for an update on discussions with Caxton, which voted against special resolutions at Mpact’s AGM at the beginning of June, and an update on a recent hearing of the Competition Tribunal.
Strong said Mpact is still waiting for feedback from the tribunal. Strong said the hearing in June related to an appeal by Caxton against a ruling in favour of Mpact after it lodged an objection with the Competition Commission to Caxton’s filing of a merger application before tabling an offer. “The Mpact board has declined to support a separate merger filing because Caxton had not disclosed a proposed offer price or terms, rendering the board unable to determine whether any such offer would be in the best interests of the company,” he said.
Non-executive pay
He said Mpact has engaged with Caxton about the remuneration of non-executive directors (NED). “We have been unable to find common ground as it’s clear their conduct is underpinned by a different motive,” said Strong.
Jenkins said in the Caxton Sens announcement that Mpact has been fully advised of Caxton’s concerns around NED pay, while Strong responded by saying that Mpact “strongly refutes” all the allegations and that the board acts diligently.
Secrets
Jenkins said Caxton is of the view that the Mpact board has not complied with its fiduciary duties in that it failed to disclose to shareholders adequate details of the investigation into allegations of non-competitive conduct and risks to shareholders.
New Era is a subsidiary of Golden Era
Jenkins said Mpact also failed to disclose to shareholders all the material facts of a potential Caxton merger in Mpact’s 2021 annual report. “In failing to make proper disclosure of price sensitive information pertaining to Mpact, the Mpact board displayed gross misjudgment. Caxton is seeking legal advice.”