Ramaphosa and Sexwale bid for Johncom stake
P 24 P 25 Tycoons make a joint offer for 25% of Sunday Times owner, writes Simpiwe Piliso
PRESIDENTIAL contenders Tokyo Sexwale and Cyril Ramaphosa have made an offer to buy a 25% stake in the holding company that will own the Sunday Times and the Sowetan, among other media assets.
Johncom, one of the country’s largest media groups, announced in April that it would split into two listed companies— OpCo, to house its operational media assets, and Johncom, which would consist only of a 37.79% stake in Caxton, one of the largest publishers and printers of books, magazines, newspapers and commercial print in the country.
Today Business Times can reveal that Ramaphosa’s Shanduka Group and Sexwale’s Mvelaphanda Group presented a proposal to Johncom chairman Mashudu Romano for a 25% stake in OpCo.
Although the value of the stake has not been disclosed, documents in the possession of Business Times show that Shanduka and Mvelaphanda’s offer would give the company:
About R1-billion cash for its unbundling and restructuring.
Forfeit an empowerment discount of 30-40% of the value of the stake, implying an estimated R400-million increase in value of Johncom shares.
They would also aim to complete the deal at the same time that OpCo is established and listed. The documents state that no shareholder approval is required for this transaction.
In one document, Mvelaphanda chief investment officer Mark Wilcox cautioned Romano that Johncom’s delay in reaching a decision — due to the media company’s restructuring and unbundling of assets — could have an impact on the deal.
“Our concern with a delay is that the significant empowered cash our consortium has committed cannot be maintained indefinitely given the large number of projects we are pre- sented on an ongoing basis, including in the media sector.”
Wilcox added: “It is our opinion that Johncom’s ability to find a similar empowered investor at the pricing levels we mentioned and with our conditions attached thereto is extremely unlikely.”
When approached for comment on Friday, executives at Mvelaphanda and Shanduka declined to discuss the offer or whether Johncom had accepted.
Speaking from New York, Wilcox said: “As you are aware, Mvelaphanda Group is a listed company and we do not comment on market speculation. But what we can state is that we are actively pursuing a number of value-adding transactions in a variety of sectors. However, with respect to Johncom and OpCo, we can neither confirm or deny.”
Shanduka Group spokesman Maureen Mphatsoe said there would be no comment because Johncom is a listed company and has to adhere to the rules of the JSE. “The Shanduka Groupis therefore not in a position to comment or offer information on the matter.”
When asked about Mvelaphanda and Shanduka’s offer, Johncom chief executive Prakash Desai told Business Times: “Johncom has already announced a timetable to introduce black economic empowerment, which was reiterated at the AGM this week. It has nothing further to add at present and no agreements have been concluded.”
Stephen Mildenhall, chief investment officer of Allan Gray Limited — a 10% shareholder in Johncom — also declined to comment on the offer.
The unbundling and restructuring of Johncom, which owns the Sunday World, Daily Dispatch and Exclusive Books, has been on the board’s agenda for two years.
Since 2005, Johncom’s shareholders, led by institutional investors Coronation and Allan Gray, have been urging Johncom to sort out two issues: its black empowerment profile and the unbundling of the Caxton shares.
Earlier this year, Johncom said the unbundling of assets would allow it to focus on expanding its media and entertainment business and make it easier to bring black investors on board to meet empowerment targets.
In January, about 80% of shareholders voted in favour of disposing of the 38.56% stake in MNet/SuperSport. After the unbundling of M-Net/SuperSport and establishing OpCo, Johncom would remain with an effective 37.79% stake in Caxton as its remaining asset.
The timing of the listing of OpCo is dependent on the approval of the unbundling of the M-Net/SuperSport shares as well as shareholders’ approval of the listing of the two entities.
Since April, when Johncom announced the split in operations, there has been speculation about an empowerment deal involving a consortium made up of Ramaphosa, Sexwale and businessman Patrice Motsepe.
Motsepe, when contacted in the US on Friday, asked for written questions, but failed to respond by the Business Times deadline. It is not clear why he is not part of the bid.
Business Times has established that Shanduka and Mvelaphanda are determined to fast track acquisition of the 25% of OpCo to avoid exposing the newly established entity to a rival bid.
In a recent interview with the Sunday Times, Sexwale revealed he would remain in day-to-day control of his companies until at least December, when the ANC votes to elect a new leader.
He said he would put all his business interests into a blind trust when and if elected president of the party, not before.
Ramaphosa, known to have been former President Nelson Mandela’s preferred choice to succeed him as ANC president and president of the country, left politics for business in 1996. Despite lobbying from within the ANC and other quarters, he is said to be cool on the idea of entering the ANC leadership race.
Included in the Johncom stable is a stake in the Financial Mail magazine and the newspaper Business Day. The Sunday Times has 3.5 million readers. It also has a daily publication, The Times, which is delivered to more than 140 000 subscribers each day.
RUNNER: Mvelaphanda’s Tokyo Sexwale is in the ANC race
BIDDER: Shanduka’s Cyril Ramaphosa is being lobbied