The offer by Canadian group DataMirror to buy the shares of locally-listed Idion Technology Holdings closed yesterday, with the Canadians failing to net the intended 50% plus one share. Yet it has managed to buy up almost 37% of Idion and has made its offer of 180c per Idion share unconditional. The question is what will happen now.
Since the offer has been extended indefinitely, that stake may continue to increase. Yet, since DataMirror has made it clear that Idion is a rival, Idion CEO Nicolaas Vlok has repeatedly rejected any idea of offering Idion`s largest shareholder a place on the local company`s board.
Together, Idion management and family members own about 44% of the company`s stock, and are likely to stand behind his determination to keep DataMirror out of the boardroom, making it unlikely that the Canadian company will be able to participate meaningfully in Idion`s strategic direction, unless it manages to convince other shareholders to sell. The largest institutional investor is Metropolitan, with 8%, and it has committed itself not to sell below R4.
DataMirror has a large block of shares in a company it sees as a competitor, even though DataMirror CEO Nigel Stokes has continually labelled Idion as being in a financially precarious position.
Iain Scott, finance editor, ITWeb
That leads to a potential dilemma. DataMirror has a large block of shares in a company it sees as a competitor, even though DataMirror CEO Nigel Stokes has continually labelled Idion as being in a financially precarious position.
Having gone on record several times as saying that Idion is a weak company, Stokes now has to explain to his own shareholders why he chooses to invest their money in a supposedly weak company listed in SA. DataMirror is an IT company, not an investment holdings firm, and Stokes will no doubt be pressed to explain why he is putting shareholders` funds into another company instead of spending it on developing his own group and technology.
What that means is that DataMirror is going to have to decide what to do with its stake in Idion. If it chooses to hold onto it, and indications are that this is what it wants, it will have to market the idea successfully to its own shareholders.
Idion is also in a difficult position. Despite Vlok`s insistence that DataMirror will be treated like any other minority shareholder, its rival is the largest individual shareholder, and unlikely to be a quiet one, which means that at least in part Idion is answerable to it.
While Vlok says there are no synergies between the two groups and has ruled out a merger, the time has perhaps come to talk at some level, at least about shareholder interests. DataMirror is, after all, the largest shareholder.
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