DataMirror to close offer for Idion shares

By Iain Scott for Idion Technology Holdings

Johannesburg, 20 Jun 2002

Canadian group DataMirror, which launched a hostile takeover bid for local company Idion Technology Holdings in March, is to close its 180c cash offer for Idion shares on 4 July.

In terms of Securities Regulation Panel (SRP) rules, once the offer is closed Idion shareholders will no longer be able to surrender their shares in exchange for the 180c per share DataMirror is offering.

The Canadian group has managed to garner 36.9% of Idion, doubling its stake from the 16.58% it held at the time it launched its takeover bid.

The ownership of shares representing another 1% of Idion is in dispute. Marius Vlok, the father of Idion CEO Nicolaas Vlok, says the shares, which were held by him, his wife and younger son, were submitted for dematerialisation, but ended up being sold to DataMirror in terms of the offer.

He says there was no instruction to sell. His broker, DWM, agrees, and has launched a court battle to reverse the sale. Transfer secretary Computershare Investor Services maintains that it submitted the shares to merchant bank BOE in accordance with instructions.

The Pretoria High Court last week froze the transaction until tomorrow, when the matter is to appear before the court again.

In terms of the SRP code, DataMirror will not be able to make another formal offer for Idion shares for 12 months from the closing date. The number of shares it can acquire on the open market will also be restricted.

Should DataMirror hold between 35% and 50% of Idion at the close of the offer, it will be able to buy only another 4.9% of the shares.

"This is the final opportunity for remaining shareholders," says DataMirror CEO Nigel Stokes.

"All indications are that the second quarter in North American software markets is going to be tough and the outlook for the rest of the year remains uncertain. In the North American IBM iSeries high availability market there are three major competitors with each getting about one third of the new customer purchases. Margins will continue to be squeezed."

Stokes believes the Idion share price will fall back to pre-bid levels. "As the largest shareholder, Idion management will have to take us seriously. They will not be able to do anything significant without speaking to us as their largest shareholder."

However, Nicolaas Vlok is sticking to his guns and maintains that he sees very little synergy between the two companies.

"When I met with Nigel Stokes on 16 March I invited him to describe in writing the synergies he sees," he says. "Then he proceeded with the hostile bid the next Monday.

"If he sees synergies he can present to the board, he can still opt for that. But I don`t believe we should talk just on the basis of their being a shareholder.

"The only thing they can block from a legal point of view is special resolutions, like increasing the authorised share capital or a name change, but there is no need for that right now. And the only way they can get cash is if we declare a dividend. Right now it is not in our business plans to declare dividends for the foreseeable future."

The Idion share was trading unchanged at 185c a share on the JSE this morning.