Johannesburg - Kagiso - Asset Management, the second biggest shareholder in takeover target AdvTech, is disappointed that the board of the company had decided not to refer Curro’s offer to all shareholders.
Simon Anderssen, a Kagiso Asset Management Investment analyst, yesterday expressed concern at the AdvTech board’s lack of transparency in the withdrawal of the company’s cautionary.
Coronation Fund Managers and Kagiso Asset Management are AdvTech’s biggest shareholders with about 24 percent and 11 percent, respectively. Old Mutual Investment Group is also a major shareholder.
Anderssen’s comments come as Curro Holdings, the private education group, geared up for a hostile takeover of rival AdvTech.
Sweetener
Yesterday Curro appeared to be stepping up its takeover bid for AdvTech, saying it would restate its R6 billion offer to Advtech shareholders and include a sweetener of a 50 percent cash consideration for shareholders who did not wish to accept Curro shares.
The company said this meant that minority shareholders would likely be able to receive 100 percent cash, as many of the major AdvTech shareholders had indicated a preference for Curro shares.
Earlier this week, AdvTech rejected Curro’s offer, sending its shares plunging 8 percent, a nine-month low.
Anderssen said Curro’s offer represented a substantial premium to the prevailing market price of AdvTech and Kagiso believed it fairly valued AdvTech’s operations and its exciting growth strategy.
He said through engagement with Curro management, Kagiso were satisfied that the deal appropriately valued the opportunities and risks of the extraordinary growth in Curro’s cash flows forecast over the next stage of its business cycle.
Withdrawal
“We are also concerned by the board’s lack of transparency in their withdrawal of the cautionary, which cites the best interests of the company and, as a consequence, marginalises the view of their largest shareholders,” said Anderssen.
“Furthermore, Curro’s announcement appears to contradict AdvTech’s assertion that the proposed offer was not backed by a firm intention to pursue the transition and preconditioned on an unacceptable level of information sharing.”
AdvTech acting chief executive Frank Thompson maintained yesterday that the offer was not in the best interests of the company.
Incomplete
“Curro’s SENS announcements are incomplete, factually inaccurate and misleading. AdvTech has already stated that it will deal directly with Curro in this regard.
“The truth is that at this point, this is no more than a fishing expedition by Curro. Advtech stands by its position that this proposal is not in the best interests of the company,” said Thompson.
Under Curro’s cash-and-share bid, which is at a 12 percent premium to Tuesday’s AdvTech’s closing share price, AdvTech shareholders were offered 1 share for every 2.59 they hold at R13 a share and at least 50 percent cash for those not willing to accept shares.
AdvTech shares closed 0.41 percent up at R12.25 on the JSE yesterday, which was 6 percent below Curro’s latest offer, while Curro shares added 0.29 percent to R34.40.
* Additional reporting by Reuters
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