JSE-listed M-Cell is to acquire a further 20% in MTN - raising its stake to 72.1%, it announced yesterday.
The announcement follows hard on the heels of the sale of 5% of MTN by Johnnic to black empowerment groups for R600 million.
The new transaction will take place via share swops whereby M-Cell is set to acquire 67,5 million MTN Holdings shares from Johnnic in exchange for the issue of 204,4 million new M-Cell shares to Johnnic.
The transaction is timed to coincide with M-Cell`s acquisition of a further 32,5 million MTN Holdings shares from Transnet in exchange for the issue of 98,4 million new M-Cell shares to Transnet.
Irene Charnley, chairperson of M-Cell and a director of Johnnic, says the resultant acquisition by M-Cell of an additional effective 20 percent interest in MTN raises M-Cell`s stake in MTN to 72,1 percent, with Transnet holding 23 percent and the black empowerment groups the remaining 4,9 percent.
"The acquisition presents M-Cell with an opportunity of further consolidating its interests in MTN Holdings and of building synergies with the shareholders of MTN, including Transnet and Johnnic," Charnley explains.
For its part, Johnnic is in the process of realigning its investments and focusing on being a fully-fledged new media and telecommunications company.
The share swap represents one of the steps in achieving this, says Charnley, who stresses that Johnnic`s effective holding in MTN will not be affected by the share swap, which will allow Johnnic to exchange its direct, unlisted investment in MTN for an indirect listed investment through M-Cell.
The directors of M-Cell and Johnnic point out that the share swaps will have no material effect on the headline earnings per share of either company. However, the impact on M-Cell`s net asset value is material, rising from 118,5c a share to 370,4c a share (pro forma September 30 1998).
Johnnic`s net asset value rises from 2775c a share to 2940c a share (pro forma June 30 1998).M-Cell has simultaneously revealed that it is involved in further negotiations and has accordingly issued a cautionary to its shareholders.
The MTN share swaps are subject to the usual shareholder approvals. Further, it is noted that Johnnic and its Omni Media Corporation subsidiary are related parties to M-Cell because of their direct and indirect shareholdings in the company. Johnnic and Omni are therefore precluded from voting at the general meeting required to approve the acquisition.
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