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R2bn offer for stake in Caxton ends years of squabbling

Shareholders in an unlisted and little-known company, ElementOne, will have heaved a collective sigh of relief after a consortium offered to acquire its full 39.39% share in the publishing and media company Caxton in a R2.34?billion transaction was approved.

There was some confusion last week after a press release created the impression that Remgro, headed by its chairperson, Johann Rupert, was buying the stake, giving him a substantial holding in Caxton — but that has since been denied.

BidCo, a special investment vehicle consisting of Eikenlust, an indirect, wholly owned subsidiary of Remgro, and Rand Merchant Bank have offered to pay R22.51 a share, which comprises shares at a fixed price of R17.70, with the remainder made up of cash — R475-million from ElementOne.

Remgro, which owns about 7% of the new structure, will retain that holding, according to Remgro chief executive Jannie Durant. He said their involvement was indirect and they would not be increasing their stake in Caxton.

"There appears to be some confusion about Remgro's role," he said on Monday. "No cash is being put in by Remgro. The company is just part of a vehicle being used to unbundle the shares."

Remgro has a shareholding in as a majority shareholder of Hosken Consolidated Investments, but has shown little interest in expanding into print. If anything, the indications are that Remgro is more interested in radio and has its eye on the successful Kagiso Media.

Legal and boardroom wrangling
The bid, if approved by the Com­pet­ition Commission and given the thumbs up by an independent evaluator, brings to an end four years of legal and boardroom wrangling, some of it apparently acrimonious.

For several years major shareholders such as Allan Gray and Coronation were unable to sell their shares because of a complex holding structure.

The shares in ElementOne could not be sold because Caxton chief executive Terry Moolman insisted that Caxton had a decade-old agreement with Johncom, now the Times Media Group, for first rights on the shares. There was also a complicated direct and indirect shareholding through several companies.

Caxton also owns 20% of Element­One, a holding that Moolman increased in the past two years.

The BidCo offer was made within weeks of an announcement by Element­One that it would unbundle about 18% of its shares, which it held directly.

It is hoped the deal will make more shares available on the market, but it has also firmly entrenched Moolman's control of Caxton.

Moolman's blessing
Sources familiar with the deal say it has Moolman's full blessing, as it ensures he retains full control of the company. He has a 46% shareholding in Caxton and CTP Publishers and Printers through a vehicle controlled by himself and Noel Coburn.

Moolman refused to comment this week, saying that he knew "nothing about the deal".

The shares initially rose 25% on Friday to R25 on the news, before ending 18.2% down on Monday at R20.45. Market analysts believe that shareholders might not have realised initially that the offer only applies to ElementOne shareholders.

ElementOne's history has been eventful. It was formed at the time that Johncom sold its stake in M-Net and SuperSport to Naspers. Johncom was separated into the publishing arm Avusa and ElementOne, which held some cash as well as the Caxton stake.

In a hearing in the South Gauteng High Court in 2010, Moolman accused Allan Gray and Coronation of trying to gain control of Element­One to break up Caxton for short-term monetary gain as, he claimed, they had done to Johncom.

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