Ann Crotty
Times Media Group (TMG) surged R2.10 just before the close of trading yesterday, taking the share to a close at an all-time high of R21. It is unclear what was behind the price increase, which was in very low volume, and came days after the release of details about TMG’s plan to sell I-Net Bridge to McGregor BFA in a R115 million transaction.
The price tag could rise if I-Net can resolve an impasse with Strate and secure continued access to up-to-date JSE shareholder information.
TMG’s notice last Thursday on the proposed transaction stated that the price could be increased by up to R10m if I-Net could recover between 10 percent and 100 percent or more of the income it lost as a result of Strate’s interpretation of the new Financial Markets Act.
Because of its conservative interpretation of the new act, in early June Strate, which is the JSE’s central securities depositary, decided that it could no longer sell information from its register of shareholders of listed companies to data vendors such as I-Net, Ince and McGregor. Since then the vendors have been unable to provide clients with up-to-date information about shareholders of JSE-listed companies.
Strate’s decision sparked a series of talks with the Financial Services Board (FSB) and the Treasury to address Strate’s concerns about confidentiality constraints raised by the act.
On Monday an FSB spokesman told Business Report that the FSB, Treasury and Strate were working on a guidance note, which was aimed at enabling Strate to sell the data without contravening the law.
“The guidance note should be out by the end of August,” the spokesman said.
The sooner the guidance note is released, the sooner the problem will be resolved and the sooner I-Net can resume supplying its clients with the Strate-sourced data and recover the lost income.
While one industry source said the rationale for the deal was perplexing given TMG’s need for information for its journalists, another said the deal made sense because it had become clear that TMG did not have the resources needed to grow I-Net.
“The electronic systems underpinning the service are crashing a few times every day because TMG, and before it Avusa, have not undertaken the necessary investment to keep them upgraded,” a source said.
The sale to Naspers-backed McGregor will not only create a larger entity but will ensure the enlarged entity has the funds necessary to keep the technology updated. This should help I-Net/McGregor to compete with Bloomberg and Reuters, which are the major players in the market for financial data.
I-Net and McGregor do not compete head-on with Bloomberg and Reuters and have instead opted to focus on niche markets. I-Net, which is larger than McGregor, had a “rich offering on South Africa-related information as well as a very good base of data on 18 other African countries,” said an industry source who added that this was the area the new entity was likely to focus on.
The deal has to be approved by the competition authorities.