Comparex shareholders have voted to approve the sale of the company`s European business to a management consortium for 12.7 million euros, up from the expected price tag of 10 million euros.
The price was raised at the last minute - for the second time in a week - because of a slightly higher offer by a second bidder. The original offer by the management consortium was 8.5 million euros.
At a shareholders` meeting this morning, almost 69% voted in favour of the sale to Montefiore, a private company set up by the management buyout team to take over the loss-making European division. As part of the deal, Comparex is getting the 35% stake in Mosaic Software.
First news of a second bidder surfaced last week when Comparex announced that the offer by Montefiore had been raised from 8.5 euros to 10 million euros, but no details were disclosed.
The second bidder is US private equity firm Platinum Equity, which today offered 15 million euros. However, its bid was rejected because the terms were not as favourable as Montefiore`s. Had Platinum Equity`s bid been accepted, Comparex shareholders risked having to continue funding Comparex Europe`s losses should the deal be rejected by European regulatory authorities.
The deal has been subject to much controversy as, initially, 70 million euros in cash was to go to Montefiore as part of the European business. However, Comparex said on Sens yesterday that that amount had in fact dwindled to only 50 million euros. It also said it would cost 153 million euros to close the European business, retrench staff and meet all obligations to customers and suppliers.
Last week Dave Sullivan, a former Comparex director, placed two advertisements in Business Day, one to staff and one to shareholders, urging them to vote against the management buyout.
He sharply criticised the deal, saying it amounted to "a cash heist" being attempted "while there was already a cash heist in progress".
The decision to shed the loss-making European division resulted from an institutional shareholder-led boardroom coup earlier this year. In the year to May the European business incurred a headline loss of R279.9 million, resulting in an overall headline loss of R59.1 million for the group.
The institutional investors, from Allan Gray, Investec Asset Management and Sanlam Investment Management, succeeded in ousting five of the group`s non-executive directors and having them replaced with their own nominees to give them 50% board representation.
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