Tag: shareholders

Xerox in hostile takeover bid for HP

By Nico Grant for Bloomberg

HP has said that rival Xerox has started an unsolicited offer for all outstanding shares of HP, escalating a battle for control of the personal computer giant.

Xerox has pitched HP investors on a cash-and-stock offer worth $24 a share. For each HP share, a holder would receive $18.40 in cash and 0.149 Xerox shares. The photocopying pioneer has said combining the companies would yield $2 billion in cost savings and more than $1 billion in additional revenue growth. Both hardware companies have invented technologies still in use by consumers and office workers, and have struggled in a world increasingly driven by software.

HP’s board has rejected Xerox’s offer as undervaluing the Palo Alto, California-based company, and said last week it will return $16 billion to shareholders in an effort to show it can stand on its own. HP executives, however, said they will engage Xerox to discuss a potential combination on their terms.

On Monday, HP said in a statement that it will review Xerox’s offer over 10 business days before advising the best course of action for shareholders.

By Ann Crotty for Business Day

Shareholder activists are gunning for fashion retailer Truworths in a bid to force changes to its board and executive management, which, 24 years after the country’s first democratic elections, continues to be dominated by white men.

Transformation in the retail sector, which does not rely on government for licences or for business, has lagged sectors such as mining and financial services.

With two black women on its 11-member board, of which one was appointed in February, and only two women and no blacks among its 19 divisional directors, Truworths falls short of even the low levels of transformation in the retail sector. In the mining sector, 50% of directors must be black, of which 20% must be black women.

Shares in the retail sector have been hit by weak economic conditions, which have knocked consumer spending. The general retailers index is down 18.1% since the start of 2018, lagging the all share index, which has shed 12.27%. Truworths is down nearly 14%. This has added to calls for board and management changes.

Bishop Jo Seoka, chairman of Active Shareholder, which advises nongovernmental organisations how to vote their shares, said the Truworths board was dominated by white men who had been directors for a worryingly long time.

“They seem to treat these as lifetime appointments; it’s amazing that they don’t realise that this looks like the quintessential old boys’ club.”

‘Lack of transformation’

Active is voting against two of the five directors who are up for re-election at the retail group’s annual general meeting on Wednesday.

It is voting against former Truworths executive Tony Taylor (71), who is described as an independent nonexecutive director, although he has served on the board for 19 years. “His reappointment is opposed on the grounds of the lack of transformation, the lack of independence and the fact that younger directors are not being introduced,” said Active in its proxy statement.

It said it was also voting against recently appointed Hans Hawinkels because it believed it was not appropriate for the board to appoint another white man in his late 60s.

In his chairman’s statement, Hilton Saven, who has been on the board for 15 years and is deemed independent, described the Truworths board as “strong, well balanced and diverse in its composition, expertise and opinions.”

Chief operations officer David Pfaff said the board was unaware of shareholder concerns, and that the board would “like to engage with them.” He said the group was already close to its own target of 30% women and 30% black directors.

Shane Watkins, chief investment officer at All Weather Capital, said the “demographics of the board and of the executive management team is completely detached from the demographic of their core customer.”

Although All Weather Capital did not hold Truworths shares, Watkins said he would attend the annual general meeting to engage with the management about the lack of transformation. Analysts from All Weather Capital, whose executive chairman John Oliphant chairs the Code for Responsible Investing in SA, are represented at most annual general meetings as part of their strategy to champion governance and empowerment issues, he said.

Active is also voting against proposed fee increases for non- executive directors.

Average director fees have increased 210% since 2008, compared with an increase in profit before tax of 108% over the same period.

Directors’ fees have also increased at a much higher rate than employee wages.

Naspers to unbundle and list MultiChoice

By Nick Hedley for Business Day

The transformation of Naspers, which was founded more than a century ago to produce Dutch-language newspaper De Burger, into an online-only behemoth is almost complete.

Africa’s most valuable company, which owns a 31% interest in Chinese internet giant Tencent, said on Monday it planned to unbundle its pay-TV business MultiChoice onto the JSE.

Naspers will hand its interest in the DStv operator to its shareholders.

Investors cheered the news. After falling 3.2% earlier in the day, in line with Tencent’s decline in Hong Kong, Naspers rallied to close 0.7% up at R3,206.42, valuing the company at R1.4-trillion.

Naspers hopes to list the new entity MultiChoice Group, which includes its local and rest-of-Africa pay-TV business along with Showmax Africa and security company Irdeto, in the first half of 2019. The unbundling will cap off a remarkable transformation at Naspers, which was mostly a publishing and pay-TV business until its 2001 investment in China’s Tencent.

Naspers would not raise funds through the deal, said CEO Bob van Dijk, but its shareholders would benefit as the market currently ignored MultiChoice when valuing the group.

In its sum-of-the-parts valuation, US bank JP Morgan calculated that Naspers’ majority-owned MultiChoice unit is worth $8bn. More than 90% of that value sits in SA, according to the bank. That implies that MultiChoice Group is worth more than Shoprite.

Van Dijk said Naspers plans to give MultiChoice SA’s BEE investors another 5% stake in the local pay-TV business. “Besides unlocking value for our shareholders, maybe more important we think it will also unlock value for [BEE scheme] Phuthuma Nathi, which is already one of the most successful broad-based BEE schemes.”

He said Naspers will continue to invest in its SA e-commerce businesses, which include Takealot, Mr D Food, PayU and AutoTrader. “In the last year, we invested more than R3bn in the e-commerce businesses in SA alone. We expect to continue to invest and we’re looking at interesting prospects.”

It will also retain its interest in Media24, which is moving quickly into online publishing. The pay-TV market was poised for further growth despite pressure from internet-based rivals such as Netflix.

“Even in markets like Europe, people still have traditional TV services and on top of that people have connected services. In Africa the story is even more positive — you see very significant growth in traditional TV … as well as decent take-up already in SA of [streaming services] DStv Now and Showmax. I’m confident it’s a growth story.

“I feel confident about putting the business on its own legs.”

Robert Pietropaolo, a trader at Unum Capital, said the unbundling would be positive for Naspers “but the pressure will certainly be on MultiChoice to stay competitive”.

“MultiChoice themselves have already started cutting their headcount and they have started offering lower-tier packages, which unfortunately does not bring in the desired revenues. MultiChoice will not only have to be nimble from now on, but I think they may have to re-invent themselves to be competitive,” Pietropaolo said.

In the year ended March, the pay-TV operator lost 41,000 premium subscribers across its African markets. Even though the total subscriber base grew — MultiChoice added 563,000 users in SA in the year to March — this growth came from far less profitable lower-cost packages. However, the company remains highly cash generative. Over the same period, MultiChoice generated revenues of R47.1bn and trading profits of R6.1 bn.

MultiChoice SA CEO Calvo Mawela said the company had slowed the decline in high-margin premium subscribers. It lost more than 100,000 of these customers in its 2017 financial year but reduced that number to about 40,000 in 2018.

“Our focus on Premium is beginning to bear fruit.… We’ll continue to focus on Premium to ensure that we do not see further decline in Premium subscribers going forward.”

Source: Fin24

Naspers has concluded the disposal of its 11.18% stake in Indian commerce company Flipkart, for $2.2bn (about R27.7bn), according to a notice issued to shareholders on Monday.

The e-commerce giant in May announced it was selling its stake in Flipkart to US-based retailer Walmart.

In the shareholder notice, the group said that the transaction was closed on August 18.

The proceeds of the sale will be used to reinforce the balance sheet and will be invested over time to support the growth of Naspers’ classifieds, online food delivery and fintech businesses as well as other growth opportunities, when they arise, the group said.

Naspers shares, which opened at R3 252 on Monday morning were up 4.1% to R3 310.47 by 12:19.

Follow us on social media: 

               

View our magazine archives: 

                       


My Office News Ⓒ 2017 - Designed by A Collective


SUBSCRIBE TO OUR NEWSLETTER
Top