MERGERS AND ACQUISITIONS
Cognition plans to buy Private Property
Transaction enhances Cognition's search for digital opportunities
Listed technology company Cognition Holdings, which has the well-known Kirsh family as one of its shareholders, plans to acquire Caxton's 50.01% interest in digital property portal Private Property, in a deal worth more than its market capitalisation.
The R127m deal, which will see Cognition purchasing the stake from media group Caxton in exchange for 105.8-million new shares valued at R1.20 each, is part of Cognition's search for growth through the exploitation of opportunities in the digital economy. Cognition has a market cap of R124m at Monday’s share price of 90c.
Private Property sells property-related digital advertising services on an online platform which enables property shoppers to search and find property listings, as well as property-related services such as bond origination services, insurance services and legal services.
The sale of Private Property in exchange for shares will increase Caxton’s interest in Cognition from 34.7% to more than 70%. As a result of the deal, Cognition will become a subsidiary of Caxton.
“Although Private Property will become directly controlled by Cognition, it will remain part of Caxton Group with no ultimate change of control vis-à-vis either CTP or Caxton,” Cognition said.
“We are really pleased that we could conclude a deal that maintains our independence and affords us the opportunity to enhance the role that technology can play in the real estate industry,” Private Property CEO Simon Bray said.
Cognition said the acquisition of the stake in Private Property was in line with the company’s strategy to pursue digital opportunities.
“Cognition will have further opportunities to acquire appropriate Caxton digital platforms and other owner-managed digital assets from third parties which, together with existing operational divisions, will result in Cognition becoming a growth-focused investment holding company,” the company said.
Caxton, whose market capitalisation was R3.6bn at Monday's share price of R9.39, acquired its stake in Private Property from a US private equity group in September 2017.
Caxton was part of a consortium that bought Private Property in July 2017 for R122.9m from US-controlled company One Africa Media (OAM). OAM operates Africa’s largest portfolio of online marketplaces focused on jobs, cars, property, and travel.
In that transaction, Caxton beat Naspers, the parent company of Property24. Naspers had announced in 2016 plans to buy Private Property. While neither Naspers nor Private Property disclosed the reasons for the failure of the Naspers takeover bid, a statement by Private Property CEO Bray when the Caxton deal was concluded, implied that the company wanted to maintain its independence post-acquisition.