Pressure mounts for Caxton to make a formal offer to Mpact

Caxton may be forced to bite the bullet and make a formal offer to merge with Mpact, the packaging specialist suggested on Monday. 

Caxton, a printing and publishing group, has had its sights on Mpact for years as it built a 34% stake, but negotiations on a full takeover have failed, leading to a legal battle.

In essence, the publisher of The Citizen and Farmers Weekly is trying to take over the company without making the mandatory offer to Mpact’s minorities, which would be triggered if it took its stake to 35%. It is doing so by trying to get competition regulators to allow it to file the deal as a merger.

But Mpact said in a note to its shareholders on Monday: “In the absence of an offer from Caxton, the Mpact board is unable to determine whether any such offer would be in the best interests of its shareholders and the company, and it is likewise unable to support a joint or separate merger filing.

“Should an offer be made, the board will appoint an independent board to diligently assess the merits of such an offer and make the requisite recommendations to shareholders, in accordance with its statutory duties.”

As part of the mudslinging between the two companies, in the note Mpact dispelled a number of claims made by Caxton regarding the nature of proceedings between the two companies. Caxton’s claims were made in a similar note to its shareholders last week.

Mpact denied Caxton’s allegation that it is soliciting support from shareholder Golden Era to oppose the merger and that it filed “secret representations” and affidavits with SA’s competition authorities. 

It has also been alleged that Mpact would lose Golden Era as a customer since it competes with Caxton. “The board could not conclude, in the circumstances, that Mpact is likely to lose Golden Era as a customer,” it said.

Mpact, which was spun out of Mondi and listed on the JSE in 2011 and is valued at about R4bn, has previously denied claims by Caxton that the board has been hostile to a proposed merger and failed to disclose material information to shareholders. It accuses Caxton of lacking transparency.

Mpact hit back in an application to the tribunal, which Business Day reported on in early September, seeking an order that Caxton chair Paul Jenkins stop disclosing confidential information. It accused Jenkins of using Moneyweb, on whose board he sits, to repeatedly share private information that he is prohibited from disclosing, even to his board.

gavazam@businesslive.co.za