There must be something about Afrikaans media companies and the end of the year. Last month a consortium led by financial services group PSG launched a bid for one of the companies that is part of the controlling structure of Naspers, a multimedia group with roots in Afrikaans newspaper publishing.
PSG's bid for Keeromstraat 30, a company that controls 22 percent of the votes in Naspers, is reminiscent of the December 1990 dawn raid on Perskor, the now defunct Afrikaans media group, by Manny Simchowitz. Simchowitz made a name for himself as a deal maker in 1987 when he sold control of his company, W&A, to Jeff Liebesman's FSI, a few weeks before the stock market crash.
In both cases, the raiders believed that Naspers and Perskor would deliver better results without their control structures.
PSG chairman Jannie Mouton told Business Report last week that his consortium believed Naspers's control structure "is full of opportunities to unlock value for shareholders".
"Management in this company will perform well even without this structure," Mouton said, in reference to Naspers's two classes of shares, the unlisted A shares with 1 000 votes each and listed N shares, each with one vote.
Naspers's control structure is in effect similar to the one that existed at Perskor. Perskor was effectively controlled by the Dagbreek Trust, which owned all the extraordinary shares in Persbel, Perskor's holding company. Each extraordinary share carried four votes, compared with one for each ordinary Persbel share.
Simchowitz told the now defunct Executive magazine in 1991 that Perskor "was a classic case of a company with undervalued assets".
"This situation had existed for a number of years, owing to the voting rights of the extraordinary shares held by the Dagbreek Trust and an antiquated management," he said.
By the end of December 1990, Simchowitz had bought 27 percent of Persbel and was reportedly ready to challenge in court the right of Dagbreek to vote its extraordinary shares when Perskor sought refuge in the arms of Rembrandt, the industrial group controlled by the Rupert family.
In terms of that deal, Persbel bought 49 percent of Rembrandt's printing and publishing assets for R17.4 million, paid for by a combination of Persbel shares and cash. The deal resulted in Rembrandt becoming a 32 percent shareholder in Persbel, thus reducing the percentage of the shares owned by Simchowitz below the 25 percent level that would have allowed him to exercise significant influence in the affairs of the company, including the power to block special resolutions.
Rembrandt's shareholding in Persbel was later reduced to 24 percent after pressure from the JSE. Simchowitz later sold his shares to Naspers for R18.5 million, in a deal in which he reportedly made a profit of R10 million.
Perskor survived the raid by Simchowitz. But his actions left the company shaken. After a short-lived marriage to Kagiso Trust Investments, the black empowerment group led by Eric Molobi, Perskor was bought by Caxton in 1998.
Both the Perskor and the Naspers cases raise questions about the control structures that are designed to separate voting control and economic interest. In Naspers's case, the owners of the low-voting shares receive the lion's share of the dividends and the increase in the value of the company but they don't have voting control, which effectively sits with Naspers directors.
This dual structure is not unique to South Africa. Other media companies use it. Dow Jones & Company, the publisher of The Wall Street Journal, is controlled by the Bancroft family through its ownership of the class B shares, each with 10 votes.
Another media group, the New York Times Company, which publishes the eponymous newspaper, also has two classes of shares. Owners of the class A shares may only vote for the election of five of the 14 directors of the company.
The remaining nine directors may only be voted for by the shareholders of the class B shares, which are not publicly traded.
Descendants of Adolph S Ochs, who bought the New York Times in 1896, own 83.7 percent of B shares through the 1997 Trust.
The Washington Post Company is controlled by the Graham family through a structure similar to that of Dow Jones and the New York Times Company. Unlike Naspers, Dow Jones, the New York Times and the Washington Post do not split financial gain and voting control. They pay the same dividend to both classes of shares.
Dow Jones argues that its control structure is necessary to maintain "the independence and integrity" of the Wall Street Journal and its other titles.
It would be interesting to establish why Naspers directors believe the company should keep its two-class share structure. Whichever way PSG's battle for Naspers goes, there is no doubt that the actions of Mouton and his partners will force Naspers - the last "Mohican" of Afrikaans media groups - to review its control structure.