JSE-listed telecoms and IT solutions provider FoneWorx says the Kirsh family has wrapped up its purchase of just over 30% of the company's stock.
The deal follows shareholder approval for FoneWorx to buy out the Industrial Development Corporation's (IDC's) 30% stake and then sell it to the Kirsh family, at the same price. FoneWorx bought and sold the shares at 130.81c and its stock was trading at 185c in early afternoon trade yesterday.
The Kirsh family is now the largest shareholder in FoneWorx, with a 32.8% stake. The deal received 100% support from shareholders and will now lead to a merger between a new Kirsh business, Value+ Nettwork, and FoneWorx.
FoneWorx CEO Mark Smith says the share buyout and sale "was always intended to be the first phase in a broader strategic initiative with the Kirsh family, and we are now in a strong position to make this a reality".
FoneWorx's strategic relationship with the Kirsh family will be consumer-focused, backed up by IT platforms. The listed company has five operating entities, including BizWorx, which focuses on business-related products, and MediaWorx, which provides information and entertainment services.
For the year to June, FoneWorx's revenue gained 7.7%, to R98.6 million. Its operating profit improved 16.8%, to R28.6 million. It says the growth was primarily the result of the significant revenue increase from MediaWorx.
Strategic partners
Entrepreneurs Issie and William Kirsh - the Kirsh family - will join FoneWorx as strategic, value-enhancing shareholders, the listed group has said. The family's investment in FoneWorx aims to create a growth platform, with the intention of aligning the company with the Kirsh family assets.
Smith says FoneWorx has been actively looking for new growth opportunities and the proposed merger with Value+ is considered a great strategic fit. He adds that the strength of the combined experience of the two companies' management teams augurs well for a good partnership.
Issie Kirsh founded radio station 702 in the early 1980s, and his son, William, flipped the station into what is now Primedia, which was founded in 1994. The media group listed in 1995 before being de-listed after a private equity buyout in 2007.
Since resigning as CEO of Primedia in August 2009, William Kirsh has spent two-and-a-half years developing and refining the strategic blueprint for a new company, Value+ Nettwork, as well as starting a series of acquisitions in line with this blueprint. Issie has partnered William in the new venture.
William says Value+ Nettwork can now move towards merging with FoneWorx, a move which is intended to be mutually beneficial for both companies. "As the business model is technology and intellectual property driven, it is very scalable," he says.
The merger terms for the two companies and additional information on the Value+ strategy and its businesses are expected to be announced towards the end of November.
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