Johannesburg - The board of New Africa Investments Limited (Nail) has chosen the consortium led by Johnnic Communications (Johncom) from the throng of Nail's suitors.
If shareholders agree, Johncom and Kagiso Media will, ironically, have turned the tables on Nail's bid to acquire them.
The board announced yesterday its approval of a R1.3 billion offer by the Johncom consortium, which includes Kagiso and Caxton, after the consortium offered R10.66 a share.
Though there has been interest expressed from many quarters, the only other confirmed bid is from a consortium led by Safika (which, through Phaphama, is a major shareholder in Nail). They have offered R10.50 a share.
If Nail shareholders - mainly Phaphama and Hollard Investments - agree to the Johncom offer, they will receive a cash payout of R7.21 a share.
After that, they will be given the choice of retaining their shares in Nail's media assets, or selling them for a further R3.45 a share, making a total of R10.66.
Shareholders could also receive proceeds from the sale of other assets, such as the Hertz car rental business, which Nail could sell to the consortium or to third parties for higher prices.
Kenny Setzin, a director of Nail, said the Johncom consortium offer had been selected on the basis of its attractive pricing and timing of cash flows and the degree of choice afforded to shareholders.
Harold Bopalamo, a media analyst at Barnard Jacobs Mellet, said: "It's not a bad deal - unless a better offer from another group comes along."
He said the bid was a good deal both for Nail shareholders and for the Johncom consortium.
It was also good for the media sector because it would mean Nail's assets would be used more efficiently, he said.
Connie Molusi, the chief executive of Johncom, said if the bid was accepted, his consortium would dispose of Nail's non-core assets and would split the media assets among its members.
Kagiso Media, which is already strong on radio with a 42.5 percent stake in Radio Jacaranda 94.2fm, is likely to seek Nail's radio assets. Nail also has a 42.5 percent Jacaranda stake, as well as stakes in Kfm and Kaya.
Johncom, which has stakes in Financial Mail, Business Day and Sowetan Sunday World, is likely to go for full ownership of Sowetan Sunday World and the daily Sowetan, and possibly take over Leadership magazine.
Molusi said the consortium would continue to seek opportunities for further media consolidation.
Roger Jardine, the chief executive of Kagiso, said the initiative by Nail to sell its assets had injected new life into the media sector. "It's a positive development," he said.
The Johncom bid was structured to ensure maximum benefit for Nail shareholders. "We expect to distribute cash to shareholders by the end of October," he said. The Nail board will recommend that shareholders approve the transaction, provided that there is no improved share offer.
Johncom closed unchanged yesterday at R16.91 and Kagiso also closed unchanged at R4.50 a share.