Magister meets with takeover authority as Tongaat bid continues

Magister Investments is set to find out this week the fate of its rights offer deal with Tongaat Hulett when it appears before the Takeover Regulation Committee.

The Mauritius-based investment company is primed for a potential takeover of the sugar producer but a decision by the Takeover Regulation Panel (TRP) stands between the company and its goal.

Magister committed to underwrite about R2 billion of the embattled sugar producer’s R5 billion rights issue, which the company hopes to put towards its R6.8 billion debt.

The deal with Magister could potentially lead to it taking over the 147-year-old company. However, the TRP hurdle came after the takeover authority made a ruling that threatens the deal.

By law, if any company and any party act in concert and buy more than 35% of a company, then the company will have to make an offer to buy all its shareholders out. But one of Magister’s conditions was that Tongaat wouldn’t make such an offer.

In January, Tongaat’s shareholders waived their right to the buy-out offer by means of a vote. But some minority shareholders protested that close associates of Magister had bought up Tongaat shares ahead of the vote to help sway the outcome.

The TRP looked into the issue and found that the associates and Magister were acting in concert, resulting in the authority cancelling the waver. Magister has since applied for a hearing at the Takeover Special Committee where it will challenge the TRP’s finding.

“A date for the hearing has yet to be set. We expect to know the timetable and process after formal meetings with the TRP occur this week,” said Magister’s representative Hamish Rudland on Tuesday.

The Zimbabwean Rudlands family owns Gold Leaf Tobacco, one of South Africa’s largest cigarette suppliers.

“Whilst Magister does not agree with the findings of the TRP, it is not opposed to making an offer to minorities should it exceed 35% post rights issue nor is it opposed to not exceeding 34.9%, should Tongaat and/or its shareholders prefer,” Rudland added.

He further said that if Magister is not successful in having the TRP’s ruling overturned, then it will have to make an offer to Tongaat’s minority shareholders, should its stake exceed 35% after the rights issue. – fin24.com