Times Media Group’s (TMG’s) largest shareholder, Blackstar, has tabled a nonbinding expression of interest in buying the 67,5% of the shares in the media company it doesn’t already own.
At the same time — but in an unrelated move — Blackstar has said it is in talks to buy a 22,9% stake in listed investment group Kagiso Tiso Holdings (KTH).
The first proposal, which would see TMG becoming a wholly owned subsidiary of Blackstar, involves an offer to other shareholders of cash — up to R500m, or up to 26,6% of the offer price — with the rest made up of new Blackstar shares.
The total number of new shares to be issued is dependent on how many shareholders elect to take cash. The expected minimum and maximum number of new shares to be issued, if the deal goes through, is 90,8m and 123,7m.
Blackstar has proposed that TMG declares a pre-acquisition dividend of 30c/share upon the proposed deal becoming unconditional but before Blackstar acquires the shares. In compliance with regulations, the board of TMG has appointed an independent board to evaluate the proposed scheme. This board will appoint an independent expert acceptable to the Takeover Regulation Panel to provide it with a fair and reasonable opinion of the offer.
If the deal goes through, Blackstar executives who have management roles in TMG will continue to fulfil the same roles to “ensure continuity of management and a continuation of the strategy initiated by the Blackstar executives at TMG”. In addition, TMG’s listing on the JSE will be terminated.
Meanwhile, Blackstar said it entered into talks to buy a 22,9% stake in KTH — by way of a reverse investment scheme — before submitting its offer to TMG shareholders. Blackstar is offering nearly R2,1bn in cash and shares to buy Tiso Investment Holdings’ (TIH’s) and the Tiso Foundation’s stakes in KTH. In terms of the proposed deal, Blackstar will be renamed Tiso Blackstar Group.
TIH will reverse into Blackstar its equity interest in KTH in return for R485m in cash and 92,8m in new Blackstar shares.
TIH is a co-founder of KTH and is jointly owned and managed by co-founders Nkululeko Sowazi and David Adomakoh. The merged entity’s CEO will be Andrew Bonamour, Blackstar’s founder (and also CEO of TMG). Adomakoh and Sowazi will become chairman of Tiso Blackstar (the group’s listed holding company) and chairman of Tiso Blackstar South Africa (the group’s primary advisory entity) respectively.
KTH is an investment holding company whose interests include media assets housed in subsidiary Kagiso Media.
Kagiso Media’s operations could be seen as complementary to TMG’s. It owns a number of radio stations, including East Coast Radio and Jacaranda FM. TMG is also expanding into radio and has a number of newspaper, online and television assets.
KTH’s other assets are in the resources, financial services, property and infrastructure sectors. Other than Kagiso Media, larger investments include MMI Holdings, Exxaro, Actom and Fidelity Bank in Ghana.
“In the face of digital media and the decline of tangible media (print media), TMG currently has limited scope for future investment and therefore limited opportunity to optimise shareholder returns,” TMG and Blackstar said in a joint statement to shareholders.
“As a wholly owned subsidiary of Tiso Blackstar, TMG’s future cash flows may be utilised to support Tiso Blackstar’s broader strategy allowing for potential reinvestment in other value-yielding sectors.” — © 2014 NewsCentral Media