Novus share falls on Media24 ruling
• Latest in competition saga around printing company
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.