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

Sunday Times - - Business Times -

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

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