Altech has other plans

By Iain Scott, ITWeb group consulting editor

Johannesburg, 13 Mar 2006

Although Allied Technologies (Altech) has backed away from bidding for Prism, CEO Craig Venter says the group has retained its cautionary notice as other talks are taking place.

"There are other attractive opportunities for us currently and we are in process with these," he says.

Altech announced on Friday night that it had decided to withdraw from the bidding process for Prism, as it was not willing to become involved in a bidding war.

This came a week after Net1 Applied Technologies SA (Net1), the original bidder for Prism, matched Altech`s price of R1.16 per Prism share, which values Prism at R686.94 million.

Net1`s original offer price, set on 8 February when the company announced its firm intention to make an offer, was R1.02 per Prism share, or R604.03 million. That was 28% up on Prism`s market capitalisation at the time.

Altech says R1.16 is already "fairly high" and any new bid would have to be meaningfully higher to have a reasonable chance for success.

"In its view, anything materially over 116c would be overpricing Prism and it is not willing to get into a bidding war," the group says in a statement.

"In addition, Net1 had obtained an agreement with the board of Prism that Net1 would be paid a 'break fee` of R6.8 million in the event of a successful third party offer to Prism. Effectively, this would have further increased the cost of a new offer for Altech."

Shareholders - including some Prism directors - owning about 43% of Prism`s issued shares have provided irrevocable undertakings to support the Net1 offer.

Altech says that in view of these undertakings, it would not be able to make satisfactory arrangements relating to Prism`s executive management and their continued involvement in the management of Prism.

It would also not be able to achieve a majority in terms of a scheme of arrangement.

Altech has notified the Prism board of its decision not to make an offer.

The Altech share was trading at 5 050c on the JSE this morning, up 65c or 1.3% from Friday`s close, which was itself up 1.7% higher than Thursday. Prism, at 111c this morning, was 5c or 4.3% down on Friday`s close.

Net1 UEPS Technologies, Net1`s Nasdaq-listed parent, closed at $0.23 or 0.77% down at $29.64 on Friday.