South Africa: Thumbs Up for Johncom's Naspers Deal

Investment

The Competition Tribunal has unconditionally approved the sale of Johnnic Communication's (Johncom's) 38% stake in M-Net and SuperSport to Naspers, overruling objections from media company Caxton.

The tribunal unconditionally approved the merger between Naspers, M-Net and SuperSport yesterday. This will give Naspers full ownership in M-Net and SuperSport ahead of likely competition in the pay television market -- in which it is a big player through its subsidiary, MultiChoice. The deal will place 20,8-million shares in the hands of Johncom shareholders, at a present value of R4.2bn. When the deal was struck almost exactly a year ago, it cost Naspers R3.15bn.

The tribunal did not gave reasons for the decision, but these would follow shortly. The decision did, however, rebut Caxton's concerns, that control of such an asset would enable Naspers to "bundle" its advertising with print media to the detriment of other media companies. Caxton was not available for comment.

Naspers chief financial officer Steve Pacak said: "It's taken a year but we can now go ahead and complete the deal." Sources said, however, that Caxton had the right to request a review from the Competition Appeals Court and, with its permission, could ultimately fight the matter in the Supreme Court of Appeal. They said it may well exercise this right.

This would further delay the sale and also stop the next step in Johncom's plan to list its media assets in a company temporarily known as Opco, separate to a 38% Caxton stake. The sources said that if Caxton appealed, Johncom would consider listing Opco anyway -- leaving the Naspers shares alongside the Caxton stake in a separate listed entity until any appeal was resolved.

Rajay Ambekar, analyst at Cadiz African Harvest, which owns 6% of Johncom, said the company could propose such an approach as it would allow it to go forward with its original plans. It was recently announced that businessman and politician Tokyo Sexwale's Mvelaphanda Group would buy 30% of Johncom's media assets from institutional shareholder Allan Gray once Opco listed, for R1.43bn.

(Business Day (Johannesburg), 9 November 2007)