UCS Group says it will not buy fellow listed IT group CS Holdings (CSH) and has withdrawn its cautionary announcement. However, the bids for CSH have not stopped.
On 20 May, UCS created a market stir by saying that it was actively interested in buying CS Holdings. This was after Reunert and EOH had already issued statements that they were interested too.
Reunert later withdrew its interest and its CEO Boel Pretorius resigned from the CS Holdings board. The Reunert statement at the time left that group`s options open.
A short UCS SENS (Stock Exchange News Service) announcement issued late yesterday says: "The directors refer to the cautionary announcement dated 20 May 2004 and advise that they have decided not to proceed with an offer to acquire the shares in or business of CSH and have advised the Board of CSH accordingly. UCS shareholders are therefore advised that the cautionary announcement of 20 May 2004 has been withdrawn."
A market analyst says the news adds an interesting twist to the CS Holdings saga that began in February when its interim results came under the spotlight.
"The line of potential suitors is not over yet. I would not be surprised if Reunert change their minds again," the analyst says.
EOH was expected to make an offer for CS Holdings before the end of April, but has not done so yet.
"EOH is smaller than CS Holdings and while it would have made a merger difficult, it would not have been impossible," the analyst says.
CS Holdings CEO Dave Vink says there are still a number of companies that have expressed interest in the group including some foreign organisations.
"When Reunert expressed their intention it indicated to many that CS Holdings was up for grabs and so we have decided to use this time as an opportunity to see what comes up. We may not do a deal with anybody," he says.
Fink says that CS Holdings` major shareholders have been kept informed of developments. Reunert currently owns 31.7% of CS Holdings and Wordwide Africa Investments owns 26%. Other institutional investors hold smaller chunks of the shares.
The EOH interest was still on the table and Fink is due to meet with that group`s representatives later today.
"EOH and CS Holdings would make a good fit as both companies have similar business models. However, we are far from making any sort of deal," he says.
UCS CEO John Bright said in a newspaper interview that withdrawing from the deal had to do with external factors rather than with CS Holdings` business.
JSE investors did not see the news as being good for CS Holdings as its share price plunged from 35 cents to 26 cents by late this morning. The UCS and EOH share prices were little changed at 126 cents and 305 cents respectively.
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