Software giant Microsoft has sold its 12% stake in Blue Label Telecoms, bringing to an end a relationship that dated back to 2007 when the telecoms company listed.
Blue Label said yesterday in an announcement to shareholders the software company had agreed to sell its 91.85 million shares back to the company, at R4.25c a share. Blue Label stock closed yesterday at R5.13, a 2.6% or 13c gain on the day.
Investor relations head Michael Campbell says there is now “very little” left in terms of a formal relationship, and there are no plans for the two companies to work together in the future. Campbell could not disclose what the parties' previous working relationship had involved.
The company says the deal is accretive to shareholders, is an efficient use of Blue Label's excess cash, and will prevent a “potential overhang of the Microsoft shares in the market”.
Blue Label ended the year to May with a cash balance of R2.2 billion and net cash of about R500 million, after working capital investments. It provides prepaid vouchers for products such as electricity and airtime.
Microsoft bought the stake just before Blue Label listed in 2007, paying R6.75 a share, says Campbell. He says the software company was one of the founding shareholders.
As a consequence of the buyback, Microsoft MD Mteto Nyati will no longer have a seat on the board as an independent director, says Campbell. Microsoft has had a seat on the board since its investment, and Nyati was its second representative after Pete Mansour, he adds.
Microsoft says “both companies have mutually and respectfully decided to dissolve their relationship, including the position Microsoft's representative held on BLT's board”.
It would not disclose any further information due to confidentiality restrictions and strict disclosure requirements.
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