Caxton’s takeover battle

Caxton probably has more familiarity with competition law than just about any other company in SA, including giants such as Sasol, Anglo or Telkom, according to a recent article in Business Day.

The company’s latest outing before the competition authorities involves packaging company Mpact, which was spun out of Mondi and listed back in 2011:

  • Caxton wants to buy a controlling stake in Mpact
  • A commission ruling has prevented it from filing a merger notification
  • Caxton has appealed to the Competition Tribunal to overturn the commission’s ruling and allow it to file so that the takeover process can proceed
  • The battle for control of Mpact has already made corporate governance history
  • At the recent Mpact AGM, Caxton used its 34% stake in the company (built up over the past two years) to prevent the passing of a special resolution needed to pay the non-executive directors’ fees.
  • Mpact itself is no stranger to the competition authorities, including a finding that it was involved in collusive conduct relating to price fixing, collusive tendering and division of markets.

If the tribunal does not grant Caxton’s order and if the now-unpaid Mpact directors continue to insist on a formal offer, Mpact shareholders could be in for a long drawn-out battle.

At this stage there are no other bidders on the horizon so Caxton can play the long-game, which is just the sort Caxton’s controlling shareholder, Terry Moolman, is comfortable with.

The remaining shareholders can take comfort from knowing the share price is underpinned by Caxton’s offer, unless something new crops up. However, they probably shouldn’t hold out much hope for an offer above the current share price.

Moolman tells the FM that Caxton is determined to increase its shareholding to above 51%.

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