The Media24 group, a subsidiary of internet giant Naspers, has announced its intention to unbundle the Paarl Media Group, a leader in South Africa’s print industry.
The company, to be renamed Novus Holdings, will be listed on the JSE’s industrials sector in March, by way of a private placement. There it will rub shoulders with the likes of Reunert, Hudaco, Altech, Nampak and Bidvest.
While tiny in comparison to its future peers, Paarl Media is the biggest contributor to profits in the Media24 group, which includes Jonathan Ball publishers and NB Publishers, the largest general book publisher in South Africa; newspapers including Beeld, City Press and Daily Sun; magazines like Sarie, Fair Lady and Finweek as well as digital media like News24.
In the year to March 2014 Media24 earned revenues of R7.9 billion and earnings before interest, tax, depreciation and amortization of R872 million. According to the Sens statement issued by Naspers, Novus achieved revenues of R3.9 billion and an operating profit of R649 million.
The company is the biggest commercial printer in South Africa with eleven specialised printing plants and one tissue plant spread nationally. It has a strong market position in workbooks, magazines, newspapers, catalogues, retail inserts and books with most major publishers and retailers throughout sub-Saharan Africa as clients.
Capacity in self-adhesive labels, wet glue labels and tissue manufacturing is currently being enhanced as market share is gained.
The listing is part of Novus’s strategy to unlock its growth potential and diversify into manufacturing and technology where it is related to its current core business of print, says CEO Stephen van der Walt.
“Over the last two decades Novus Holdings has built a strong financial platform through successful acquisitions, organic growth and an innovative management team, using world-class technology in our various facilities.
“We believe the time is right to take the next step and explore diversification directly linked to our core competencies,” he adds.
In the past Koos Bekker, former CEO and now chairman of Naspers has justified Naspers’s continued investment in its print media business – despite the fact that he believes that print media is dying – because it wipes its own nose.
Media24 will retain an undisclosed majority stake in the business. Whether selling roughly 40% of its most profitable constituent compromises Media24 remains to be seen.
Analysts who watch Naspers closely struggled to provide a rationale (from Naspers’s perspective) for the deal, not having had the opportunity to talk to the company. “It’s possible they wanted to keep the content businesses – even if it’s not that profitable – while getting rid of the infrastructure business,” said one analyst who could not be quoted.
The Board of Novus Holdings is intended to comprise 11 directors of which six will be independent, non-executive directors. Two of the 11 directors will be appointed from the majority shareholder, Media24.
The listing price and other detailed financial information will be released in due course, however the company has indicated that it hopes to pay dividends from the outset.