MVELAPHANDA Group, which owns about 21% of Avusa, announced yesterday that it was making a bid to acquire full control of the company in a deal worth about R3-billion. Avusa owns South Africa’s largest Sunday newspaper the Sunday Times, the Sunday World, The Times, The Herald, the Weekend Post, the Daily Dispatch and the Sowetan.
The company also owns Struik Books, Exclusive Books, Nu Metro home entertainment as well as Gallo Records.
The transaction comprises a series of inter- conditional steps that will result in Mvela subsidiary Richtrau becoming a listed entity on the JSE, housing all of Avusa’s assets.
Andrew Bonamour, chief executive of Blackstar – which controls 28% of Mvela – and interim chief executive of Mvela, said: "The transaction presents a unique opportunity to consolidate South Africa’s leading media and entertainment company through a single listed entity, and to partner with a strong management team in accelerating a turnaround and new growth strategy for the business.
"This transaction further demonstrates the value unlock strategy for Mvela shareholders, which has been my key objective since becoming interim chief executive.”
No job cuts are expected if Mvela’s cash and share offer for the remaining 79% of Avusa are successful. Bonamour said the plan was not to asset strip Avusa but to build it.
There was also no intention to sell any of the media group’s assets if Mvela succeeded with its R24-per-share offer, Bonamour added.
He said the plan was to turn Avusa around.
Bonamour said there was some wasteful expenditure that needed to be looked at, but it was at the top. "Avusa has not only underperformed the market, it’s underperformed its peers,” he said.
In order to fund the offer, Mvela Group is injecting R480-million of equity into Richtrau and raising R650-million of bridge funding to finance the offer to shareholders.
Upon listing, Richtrau will have a smaller board (maximum of nine people) that will consist of an independent chairman and other experienced business professionals to support management and provide the necessary strategic guidance to the business.
Richtrau has chosen Colin Cary as the new head of Avusa following the conclusion of the proposed transaction.
Cary, currently managing director of Avusa Retail Solutions, is the founder and former chief executive of Hirt and Carter, which Avusa acquired with UHC in November 2010.
Bonamour said: "The intention is for the management of Avusa to drive a more collaborative approach to achieve cross-selling and synergy benefits between the businesses and accelerate Avusa’s cost savings and turnaround strategy. Blackstar has agreed to remain invested in Avusa for a minimum period of three years to ensure the operational turnaround is achieved.”
Richtrau has secured irrevocable undertakings from a number of key Avusa shareholders – who collectively hold 65% of Avusa shares and are therefore eligible to vote at the scheme meeting – to vote in favour of the offer.
Mike Robertson, acting group chief executive of Avusa Limited and managing director of the Avusa media division said: "The independent board of Avusa is supportive of the transaction and the flexibility offered to shareholders under the offer, subject to a fair and reasonable assessment by our appointed independent advisers Ernst & Young.
"The new shareholders have committed to upholding and abiding by the spirit and principles of the Avusa Media Editorial Charter, which promotes a free media and editorial independence.”
"We look forward to working with Blackstar and the new shareholders of Avusa,” he said. – I-Net Bridge