Johannesburg - Irish publishing group Independent News & Media (INM) has agreed to sell its South African business, the country’s largest English-language newspaper group, for R2 billion to a consortium led by Iqbal Survé.
In a statement issued last night, the board of INM confirmed it had agreed detailed heads of terms with Sekunjalo Independent Media Consortium for the sale of Independent News & Media South Africa (INM SA).
Survé, who is leading the consortium, said in confirming the deal: “I am delighted that I have the opportunity to bring these newspapers, this national asset, back to South Africa. I am bringing Independent back home.”
He said that the buyers were committed to investing in the business and believed that the ailing print media could be transformed into a growth industry with particular opportunities in vernacular newspapers and digital convergence. “We need to invest in our company and in journalists.”
Sekunjalo is the major shareholder in the consortium along with trade unions and community groupings. Survé would not give a detailed breakdown of the consortium.
Survé added that Sekunjalo Holdings had invested significantly in the purchase but he would not give details of the funding arrangements, except to say that there were South African and foreign funders.
Survé is the chairman of the Sekunjalo Group, which through its JSE-listed Sekunjalo Investments, has interests in health, technology, marine and telecoms businesses.
The consortium began its due diligence on INM SA in October last year and completed it in December.
INM SA publishes Business Report and more than 15 other titles including The Mercury, The Star, Cape Times and Isolezwe. The group was previously owned by Anglo American and was sold in the mid 1990s to INM.
Plans by INM to sell its South African business were first confirmed in July last year when it was announced Investec and Hawpoint had been appointed to advise on the sale. This was after controlling shareholder Denis O’Brien indicated he wanted to sell the South African operations.
The sale was driven by the group’s high debt that prompted it in recent years to restructure including selling its flagship UK title The Independent.
There were apparently several consortiums interested in buying the South African operations, including consortiums led by Mathews Phosa and Robert Gumede. The Gupta family was at one stage also interested in buying the business.
The purchase price is lower than the R2.5bn first flagged for the sale. The Sunday Business Post says the deal will still leave INM with debts of E270 million (R3.2bn).
Survé said he had no intention to change the current management. Asked whether the business had been “harvested” by its Irish owners, he said: “Management has had to deal with particularly difficult circumstances.”
The sale is still subject to the finalisation of further approvals and a final agreement being signed by both parties, as well as being subject to INM shareholder approval and the green light by competition authorities in South Africa. The Competition Commission process is expected to take three months.
Speculation around the sale of INM SA previously raised concern that a local buyer could exert influence over the newspapers’ content.
INM SA does not have an editorial charter protecting editorial independence. Instead editorial independence is governed by the letters of appointment of the individual editors of group titles, which states they have full responsibility for the editorial and commercial content of the newspapers. Editors also sign an internal code of practice.
Asked about public interest concerns around his links to the ANC, Survé said this would not become an issue because he had a strong personal commitment to editorial independence.
“I am a businessman and I have run Sekunjalo with integrity,” Survé said, adding that no interest group should have prominence over any other. “We must reflect the views of everybody and newspapers must support democracy and the growth of the economy. You must have many divergent views in a newspaper.”
He intended to deal with questions of editorial independence by setting up an independent advisory board which would consult with management, editors, staff and outside the business to define editorial charters.
He said he was open to approaches from the group’s staff, which had already extensively discussed establishing a staff trust which could take a share of the company to incentivise employees and involve them in decisions around developing the company.