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‘Caxton circus’ slammed

Media24 and Paarl Media abandon merger application.

Media24 and Paarl Media have abandoned their merger application to the competition authorities shortly after the Competition Tribunal granted rival Caxton permission to intervene in the proceedings and ordered an investigation into the Naspers control structure.

Media24 is a subsidiary of Naspers.

One of the consequences is that the tribunal’s intervention order is no longer applicable and the investigation into the shareholding of among others, Naspers’ former CEO and current chairperson Koos Bekker, former MIH CEO Cobus Stofberg and Sanlam, in the printing, publishing and media industry will not continue.

Naspers referred Moneyweb to Lambert Retief, non-executive chairman of Paarl Media Group for comment, since it was his decision to abandon the transaction.

Retief who wanted to retire and would have sold the remaining 5% and 12.5% in the Paarl print businesses to Media24, blamed Caxton for his having to abandon the transaction.

He issued a statement saying: “At 61 one would think that there are a few basic decisions a man can make about his own life – such as when he retires. The Retief Family signed an agreement with Media24 which gave us put options in future to oblige Media24 to buy the family’s shares in Paarl Media. After turning 60 I wanted to retire, so we exercised our put options to sell the remaining 5% and 12.5% shares in two companies in the heatset and coldset printing businesses to Media24.

“Media24 already has more than 80% of the shares in both companies, but because I had a management agreement which would lapse, we had to notify the transaction to the Competition Commission as a “merger”. “

He pointed out that the Competition Commission recommended that the tribunal approved the transaction unconditionally after carefully considering objections by Caxton, a direct competitor.

He called Caxton CEO Terry Moolman a “vexatious litigant” who has “sued numerous companies in the past.”

Retief continued: “Most unexpectedly, the Tribunal allowed Caxton to intervene on a wide range of issues. Quite extraordinarily, the Tribunal has refused to give any reasons whatsoever for its decision.” (The tribunal said in an earlier statement reasons would follow in due course).

“We simply can’t proceed with the deal, as Caxton will be as disruptive as they can and will paralyse us operationally for years to come, given the width and depth of the interventions allowed by the Tribunal. Caxton and their lawyers can in this way access Media24’s commercially sensitive information,” Retief said.

“I refuse to be part of the Caxton circus and further waste shareholders’ money. We have therefore informed Media24 today that I’m withdrawing our put option to sell our shares, and have accordingly collapsed the transaction. My management agreement therefore remains in place.”

According to the tribunal, its decision to grant Caxton’s application would have put it in a position to get access to documents filed in the case; to cross-examine any witnesses that appeared in the case during the hearing and to adduce (cite as evidence) oral and documentary evidence.

Caxton alleged in its application that the merging parties have not made a full disclosure of, among other things; the Naspers control structure and the interest of its shareholders in the print, publishing and media industry. It also alleged that the merging parties misled the competition authorities about who really controls Paarl Media before the proposed transaction.

Caxton said the merger could give rise to anti-competitive information-sharing or coordination and could negatively affect media diversity in South Africa.

Paul Jenkins, Caxton chairperson said: “Caxton has never suggested that the transaction should not proceed. Based on Paarl Media’s own protestations of absolute independence from Media24, we believed that appropriate conditions should have been imposed to preserve the independence of Paarl, following the retirement of Mr Retief.

“The Tribunal agreed that our intervention would add value to the proceedings and rejected Media24’s arguments. Opposing mergers by the largest media company on the continent can hardly be criticised. After all, Naspers and Media24 are the dominant players in our sector and have been on an unchecked merger spree for the last ten years. In the last few disputes before the tribunal involving Naspers, Caxton has succeeded in having conditions imposed and overturning a merger to monopoly.

“In the current merger, Media24 failed to disclose its control structure, as all merger parties are required to do, and their counsel even admitted they had made a mistake. But when faced with disclosure of the facts around the control of Naspers by Wheatfields Mr Bekker, Mr Stofberg and Sanlam, they threw in the towel, rather than make disclosure. It is quite extraordinary that the county’s largest media group wants transparency from all the people it reports on, but prefers itself to hide its own control structure behind a murky veil of secrecy.”

Chris Charter, director of Competition Law at Cliffe Dekker Hofmeyr said the Competition Commission may decide to continue with the investigations into who currently controls Paarl Media Group as well as the Naspers control structure if it is of the opinion that the competition concerns have not been addressed by the abandonment of the merger.

Moneyweb has asked the commission whether it plans to continue with the investigations and will publish its response as soon as we receive it.

Caxton is the majority shareholder in Moneyweb.


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