Johannesburg, 04 Sep 2002
Talks between Paracon and MGX over the sale of MGX`s Software Futures have broken down after the parties failed to agree on a price.
The companies issued a cautionary notice this morning saying only that shareholders no longer need to exercise caution when dealing in their shares as MGX and Paracon have been unable to reach agreement on the final terms of the deal.
Paracon financial director Mireille Levenstein says the two could not come to an agreement on the price.
Negotiations had come to the point where MGX was not prepared to accept anything less than the amount it had put on the table and Paracon was unwilling to pay more than its own offer.
"We had to step back and ask ourselves if we would be prepared to buy at a higher price and decided that we don`t want to be caught overpaying in any market, but especially now in a buyer`s market," Levenstein said.
"It`s unfortunate, but we had to walk away because that kind of thing can come back to bite you."
She says there was nothing wrong with Software Futures or its management, and emphasised that the disagreement was only on the valuation of the company.
Paracon has no concrete plans following the collapse of the deal, although it will consider other options. "We`ve just finished with this deal, which has taken a lot of management time and also a lot of cost, to be honest. We haven`t looked at other deals.
"But we will look at other opportunities. We`ve got a lot of cash, which many IT companies can`t say at the moment. We may also consider paying a dividend."
The MGX share was trading 25c or 4.6% down at 520c on the JSE early this afternoon, while Paracon`s share gained 4c or 8.7% to 50c.
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