South Africa: Johncom Asset Shuffle May Open Way to Acquisition


Johncom’s announcement on April 12 that it will unbundle the Caxton shares from its operational assets by listing itself as two separate companies has been welcomed by analysts, even though it could leave its core media assets open to acquisition.

Johncom CEO Prakash Desai announced yesterday that, subject to shareholder approval, two separate companies would be listed: OpCo -- controlling the operating media and entertainment assets, including Business Day, Sunday Times and Nu Metro -- and Johncom, which would retain the 38% share in Caxton. "The restructuring will enable OpCo to apply greater focus to growing the integrated media and entertainment assets of the group. This is a further step we're making to build value for all stakeholders and to introduce broad-based BEE (black economic empowerment) ownership in the business," Johncom said.

Once Johncom lists -- with Caxton as its only asset -- it will either have to sell its shares in Caxton or increase its stake to 51%. The JSE requires listed companies to have majority control of their assets and failure to do so could lead to penalties. Johncom has only a 38% shareholding in Caxton. With regard to the unbundling of Caxton, Ambekar said the move had been on the cards for some time and that the 38% stake in Caxton was a potential problem for shareholders. "I think it's always been discussed, especially after the M-Net/SuperSport shares were unbundled, that Caxton would make up 40% of Johncom shares. That's an enormous portion of your value in an asset that you don't control," Ambekar said.

Business Day