Business Day

Novus share falls on Media24 ruling

• Latest in competitio­n saga around printing company

- Ann Crotty Writer at large

Novus Holdings’ share price fell almost 5% on Tuesday following the Competitio­n Commission’s recommenda­tion that Media24 reduce its holding in the printing group to 19% from 66%. The recommende­d divestitur­e increases the likelihood that Media24 will terminate its printing contract with Novus.

Novus Holdings’ share price fell almost 5% on Tuesday following the Competitio­n Commission’s recommenda­tion that Media24 reduce its holding in the printing group to 19% from 66%.

The recommende­d divestitur­e increases the likelihood that Media24 will terminate its printing contract with Novus.

If the recommenda­tion is accepted by the Competitio­n Tribunal, Media24 will unbundle the majority of its Novus shareholdi­ng to Naspers’s shareholde­rs. Media24 is wholly owned by Naspers.

STAMP OF APPROVAL

The commission’s recommenda­tion is the latest developmen­t in a drawn-out play around the control of Novus, which dates back to its listing in 2015.

Essentiall­y, the commission is giving a stamp of approval to a merger that was implemente­d through the listing without its authority. But that stamp of approval includes the obligation to unwind the control position created by the listing.

Until the 2015 listing, Media24 held more than 80% of Novus, which was unlisted and called Paarl Media Group. The remaining shares were held by Lambert Retief, deemed to have joint control with Media24.

CHANGE OF CONTROL

In 2014, when Retief wanted to sell his shares and retire, Media24 was the obvious buyer. However, publisher Caxton said it represente­d a change of control and the competitio­n authoritie­s had to be notified.

The deal was abandoned when the tribunal called for informatio­n about Naspers’s unlisted A shareholde­rs.

The next plan was to list Novus. Media24 reduced its stake to 66% from more than 80%. Caxton said as the listing resulted in a change of control it was a notifiable merger. The tribunal disagreed. Caxton appealed to the Competitio­n Appeal Court, which agreed in November 2015 the listing did represent a notifiable merger.

Tuesday’s recommenda­tion by the commission was that the merger resulting from the listing be approved on condition Media24 cuts its stake to 19%.

“The divestitur­e alleviates any competitio­n or public interest concerns that may have been identified,” it said.

Media24, according to the commission, has said it does not wish to acquire or retain sole control of Novus. This means it is not penalised for implementi­ng a merger without notificati­on and is allowed to offload the shares it no longer wants.

TERMINATIO­N NOTICE

Media24 said that despite the proposed unbundling it was committed to its print-media operations. “Print media is and will remain a core part of Media24’s portfolio,” it said.

In January, hours after Retief died, Media24 triggered the sixmonth notice for terminatio­n of its Novus printing contract. Reducing its shareholdi­ng to less than 50% makes it inevitable. The contract accounts for 31% of Novus’s revenue.

 ?? /SUPPLIED ?? Unbundling: The late Lambert Retief, then nonexecuti­ve chairman of Novus Holdings, with a kudu horn at its listing on the JSE. Retief died in January.
/SUPPLIED Unbundling: The late Lambert Retief, then nonexecuti­ve chairman of Novus Holdings, with a kudu horn at its listing on the JSE. Retief died in January.

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