Arivia.kom has backed off from making an offer to buy JSE-listed AST, saying the deal would not be in the interest of its own shareholders.
The AST share, which closed at 90c yesterday, dropped as low as 70c on the news before recovering to 85c by late morning.
Arivia.kom is not detailing the reasons for backing off, but CFO Hugo Knoetze says the company completed the due diligence review and the board decided that a proposal to buy AST would not be in the interest of shareholders.
The company is still open to making other acquisitions in that space if the right opportunity comes along, he says.
AST CEO John Miller says the AST board was notified that arivia.kom does not intend to pursue the proposal, but no reasons were disclosed. He says while this does not affect AST itself, it is likely to affect market sentiment.
Miller says the approach by arivia.kom, which was announced in early September, was not a solicited one. There has been no decision by the AST board to put AST on the market.
"AST is fundamentally a very good business," he says. "The focused businesses - solutions, infrastructure and products - are positioned where we want them. They are profitable, good businesses that are doing what we expect them to do, and there is no active plan to sell."
Cleaning up
He says AST did need some cleaning up and the market has been kept informed about the progress of that process. "The business improvement programme is marginally ahead of where we had planned for it to be and our results for the first five months are in line with expectations."
The group`s business improvement programme, which aims to eliminate costs and cut debt levels, targets a saving of more than R200 million a year.
Miller says AST has a good client base and annuity revenue stream, making it attractive in some quarters. "If the question is: 'Is AST for sale?` the answer is no. If the question is: 'Are people approaching us?` the answer is yes.
"There are people who would like to buy us, there are other people who would like to buy pieces, but we are not in a rush to sell AST or its pieces."
He says arivia.kom has been the only party to make a real approach and complete a due diligence exercise, which necessitated publishing a cautionary announcement.
However, he emphasises that the potential deal was unsolicited and unrelated to the business improvement programme. Arivia.kom is also not a shareholder in AST.
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