The Kirsh family has walked away from a bid to create a R478 million company by merging its Value+ Nettwork with FoneWorx.
FoneWorx today published an announcement saying that shareholders no longer had to be cautious, as the proposed deal had been called off after a tiff between the parties over alleged governance breaches by FoneWorx.
Instead, Caxton and CTP Printers & Publishers will buy the Kirsh family's 32.7% stake and FoneWorx and Caxton will work together to develop a digital strategy, says FoneWorx CEO Mark Smith. He adds that FoneWorx has a platform and experience in digital aspects such as MMS, couponing and SMS, which will move Caxton closer to its customers.
Smith could not provide more details of the split, except to reiterate that the deal was terminated by mutual consent. Caxton will pay R102.5 million for the stake, at R2.30 a share, compared to the R1.85 FoneWorx is currently trading at.
Last year, FoneWorx announced it and Value+ Nettwork, founded by William Kirsh, would merge to create a R478 million company. FoneWorx said it would pay R191 million through the issue of shares at 211c for Value+, which includes a 50.1% stake in Opengate Technologies.
However, the deal unravelled after FoneWorx's due diligence uncovered that financial figures at one of Value+'s subsidiaries had been materially changed, which would have required more funding than initially anticipated, Smith has said.
However, Kirsh argued that Smith's contention about material issues with financial figures at a subsidiary was "totally unfounded" and based on incorrect facts.
The Kirsh family, which owns around 75% of Value+ and 32.7% of FoneWorx, subsequently called for an extraordinary general meeting in a bid to oust FoneWorx's non-executive directors, Gaurang Mooney and chairman Ashvin Mancha.
The Kirsh family argued that the "fundamental corporate governance weaknesses at FoneWorx are undermining the shareholders' opportunity of building shareholder value".
FoneWorx hit back, saying: "The attack by the Kirsh family on alleged corporate governance weaknesses at FoneWorx, poor board performance and so called lack of strategic direction is nothing more than an attempt by the Kirsh family to so reconstitute the board of FoneWorx as to enable them to force through a transaction, which would give them access to the significant capital required to pursue a course which the board of FoneWorx perceives as fundamentally flawed."
FoneWorx was set to pay R191 million through the issue of shares at 211c for Value+, which includes a 50.1% stake in Opengate Technologies.
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