Thumbs up for Avusa deal

Media group Avusa shareholders yesterday finally approved the takeover of Universal Print Group and Hirt & Carter announced in June as "a perfect fit for organic and acquisition growth strategy".

Approval for the R925-million deal came as a relief to Avusa management after major shareholder Mvelaphanda Group tried to block it, then backed it two days before the vote.

Mvela, which holds 25.5% of Avusa's shares, abstained from voting for the deal yesterday. While supporting the deal, it maintained it "undervalued" Avusa.

At yesterday's annual meeting, about 96% of shareholders approved the deal, which will see Avusa acquire Universal Print Group and Hirt & Carter if the remaining conditions are fulfilled.

"We welcome UHC to the Avusa family, and we are committed to deliver growth and make a success of the combined businesses," said Avusa CEO Prakash Desai.

Mvela made a dramatic U-turn on Tuesday after initially objecting to the acquisition, saying it decided not to continue with its opposition to the deal after consultations with selected shareholders of Avusa and UHC Communications.

In its initial objections last month, Mvela contended that the deal was badly priced and that Avusa would be straying from its core competence of running newspapers.

At the time, a source at Mvela claimed that Avusa wanted to acquire a business that did not complement its strategy of positioning itself as a leader in digital media.

But on Tuesday, Mvela said that while it believed the timing was bad for Avusa, it would cease its opposition.

"Following recent further discussion and engagement with the shareholders and management of UHC, Mvela Group remains of the opinion that Avusa is entering into the transaction at an inappropriate time in its business cycle. This, in effect, undervalues Avusa," it said.

"However, following these recent discussions we have been persuaded that the transaction will most likely be value neutral to Avusa shareholders should a number of contemplated initiatives be implemented," Mvela said.

One of the conditions for the proposed acquisition involved approval by competition authorities in Namibia and Zimbabwe.

Another condition was that Avusa should confirm to UHC in writing that it was satisfied that enough key employees had concluded service agreements with UPG or H&C or amended their current terms of employment to the extent required by Avusa.

Desai said: "This is a significant and positive step in our commitment to delivering on the board's approved growth strategy. Now that the approval has been given, we envisage that the finalisation of the deal will be concluded shortly."

The Avusa and UHC Communications boards had already given the deal the thumbs up. The acquisition passed a due-diligence investigation and obtained regulatory approval.