Low take-up of Phuthuma Nathi’s bad deal
MultiChoice share swap arrangement fails to draw the interest of BEE shareholders, which is not surprising, given its valuation
MultiChoice’s Phuthuma Nathi (PN) share swap looked like an offer that was designed to fail. But because of the stamp of approval from the company’s board there was a risk that a large chunk of the shareholders might have assumed it was a good deal.As it happened, only 5.8% of PN shares were exchanged for MultiChoice Group (MCG) shares — that is an acceptance rate far off the 20% level targeted by the board. It is testament to the ability of PN shareholders to spot a bad deal no matter who’s promoting it.This puts them well ahead of shareholders in ordinary listed companies, who tend to vote blindly in support of any resolution presented to them at a shareholders’ meeting.In a way, the low acceptance rate demonstrates just how successful the 13-year-old scheme has been. Much of MultiChoice’s promotional advertising for its broad-based BEE scheme — which has more than 90,000 black shareholders — has focused on how the dividend income from the shares have been used to fund education. ...
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