Idion sale ends years of acrimony

By Iain Scott for Idion Technology Holdings

Johannesburg, 17 May 2004

The acrimonious shareholder relationship between DataMirror and Idion has ended after more than two years, with both parties saying they will gain from going their separate ways.

Canada`s DataMirror, which two years ago attempted to take control of JSE-listed Idion, says it expects to make an after-tax gain of about C$6 million from the sale of its shareholding in the company.

It was announced on Friday afternoon that VenFin and an unnamed institutional investor had acquired DataMirror`s 42.58% stake in Idion.

The deal was struck at 210c a share, valuing the stake at R101.37 million. DataMirror says it expects to receive net proceeds of C$19.6 million after brokerage and advisory fees, resulting in a pre-tax gain of about C$7.4 million and an after-tax gain of about C$6 million.

As a result of the deal VenFin`s stake in Idion has increased from 6% to 34.9%, just short of the 35% level that would trigger a mandatory offer to shareholders. The balance of the DataMirror shares is to go to the unnamed institutional investor.

DataMirror has been a thorn in Idion`s flesh ever since it launched a hostile takeover bid in March 2002. The Canadian group competes in the managed availability space against Idion`s US-based subsidiary, Vision Solutions, its only operating asset.

Disruptive

Although the bid failed, DataMirror increased its stake in Idion from the 16.4% it bought on the market before the bid`s launch, to 38.8%, making it the largest single shareholder in the company. The group continued to buy shares, including, in October last year, a stake held by a former Vision Solutions employee hired by DataMirror.

DataMirror`s stake gave it the power to prevent the passing of resolutions that required more than a simple majority vote at shareholder meetings, a power it exercised readily, leading Idion MD Nicolaas Vlok to refer to it as "a disruptive competing shareholder" on Friday.

VenFin CEO Dillie Malherbe says his company "looks to be a long-term investor in innovative, high-quality businesses that have potential as significant global players". He says in the almost two years that VenFin has had a stake in Idion, it has been impressed with its strategic direction, management and market success.

Vlok says that with partners that share Idion`s vision, the company is able to continue the execution of the business plan put in place several years ago "and become the dominant player in multi-platform managed availability".

DataMirror CEO Nigel Stokes says his group decided it was in the best interests of the shareholders of both companies that it dispose of the Idion stake.

"This sale will allow both companies to move forward and concentrate on executing their respective business plans," he says. The group is expected to comment further on the sale when it releases its first-quarter results next week.