Listed gaming and hotels group Johnnic Holdings has urged its shareholders to reject an offer by Hosken Consolidated Investments (HCI), arguing that the offer, which undervalues Johnnic shares, is lower than the current share price and would deny Johnnic shareholders participation in the potential upside.
In a circular to its shareholders, Johnnic accused HCI of seeking to remove the leisure firm as a competitor, warning that the investment group could be required to dispose of its stake in Johnnic — 40% held by HCI.
The two groups are embroiled in a wrangle for the control of Tsogo Sun.
HCI shareholders have already approved a mandatory takeover cash and share offer to acquire the gaming group. In addition to a cash offer of R10,70 per Johnnic share, the investments group is offering one HCI share for every 2,821 Johnnic shares held.
In a letter to shareholders, Johnnic chairperson Cyril Ramaphosa said: “The offer denies you participation in the value that Johnnic’s gaming strategy could potentially unlock. HCI has embarked on an unsolicited and hostile offer to the shareholders of Johnnic in order to acquire Johnnic’s assets.
“The board believes that the offer by HCI does not fully value Johnnic and therefore recommends that you take no action in relation to the offer. An independent opinion from PricewaterhouseCoopers Corporate Finance has been furnished to the board advising that the cash offer by HCI is not fair and reasonable and, further, that they are not in a position to advise shareholders on the share offer.”
The company is of the view that that HCI holdings in Johnnic and Tsogo Investment Holding (Tsogo Sun’s parent company) are subject to various legal challenges at different levels. — I-Net Bridge