Times Media Group (TMG) had sold its stake in Exclusive Books and Van Schaik Bookstores to a consortium led by Medu Capital for R435 million in cash, the listed media group said yesterday.
The Medu Capital consortium will pay R325m for the Van Schaik assets and R90m for Exclusive Books. The balance of R20m is for various payments to TMG based on certain conditions.
Sandton-based Medu Capital is a specialised private equity company managing funds of about R1.5 billion.
The consortium will buy the whole of the business, assets and liabilities, of Van Schaik and 69.98 percent of the shares and 100 percent of the claims in Bookmark at UP, the official bookstore of the University of Pretoria. In addition, the consortium will buy 70 percent of the shares and 100 percent of the claims in Van Schaik Nambia.
The consortium will also take ownership of 100 percent of the business, assets and liabilities of Exclusive Books, as well as 40 percent of the shares and 100 percent of the claims in Airport Bookshop.
Vicki Myburgh, entertainment and media industries leader for PwC Southern Africa, yesterday forecast that consumer and educational books would be the slowest growing segment in the local media and entertainment industry between 2013 and 2017, gaining 0.4 percent compound annual growth rate over the next five years.
“Comparatively low literacy levels in the country and the fact that books don’t cater for [the] multiple languages in use in South Africa, continue to act as a barrier to further growth in this segment,” she said.
Books were also subject to higher value-added tax, at 14 percent, than most other countries, which meant retail prices were high for the majority of people, she added.
Van Schaik is a leading supplier of academic and reference books in South Africa and Namibia. Exclusive Books is one of the country’s largest book chains with branches throughout the country.
TMG said Van Schaik and Exclusive Books were identified as non-core, as they were not aligned to the strategic direction of TMG.
The effective date of the transaction was the first business day of the month following the month in which the sale agreements became unconditional, the firm said. The proceeds would be used to reduce the group’s gearing and some money would be set aside for potential future acquisitions aligned to the company’s core business.
Ernest January, a director of Medu Capital, said the consortium comprised Medu Captial, representing its private equity funds under management and its investors.
He said Medu Capital would play a strategic role in the businesses of Exclusive Books and Van Schaik.
“The businesses have got experienced management teams with track records of success and Medu Capital seeks to compliment the growth strategies of the businesses.
“With the announcement by the Minister of Higher Education, Blade Nzimande, of the establishment of two new universities and the huge growth opportunities by Further Education and Training colleges, Medu Capital sees good growth prospects for Van Schaik Bookstores.
“Exclusive Books has a great brand and loyal customer base, which will serve as a platform for growth into the future,” January said.
Last month, TMG announced plans to sell INet Bridge to McGregor BFA in a R115m transaction and in June sold its 51 percent stake in MAP Integration Technologies to TomTom Africa for R37.5m.
This week TMG announced the acquisition of a 32.36 percent stake in Multimedia Group, the largest independent media company in Ghana, for R144m.
The sale agreements with Medu Capital are subject to the fulfilment of several suspensive conditions, including the completion of a due diligence by the buyer, the unconditional approval by the competition authorities, written consent by the parties to certain material contracts to assign these contracts to the purchaser.
The landlords of certain premises belonging to the businesses of Van Schaik and Exclusive Books also consent to the assignment of the lease agreements to the purchaser.
TMG gained 2 percent to close at R20.40 yesterday.
By Asha Speckman – Business Report