Hostile takeover bid will fail, Idion says

By Iain Scott for Idion Technology Holdings

Johannesburg, 25 Apr 2002

Idion Technology Holdings says two years of investment is starting to pay off, and it is not about to give that up to Canada`s DataMirror, adding that the latest takeover bid is doomed to fail.

Idion yesterday formally advised its shareholders to reject DataMirror`s revised offer to buy Idion`s shares at 120c each. It says shareholders holding 55% of the company`s shares have undertaken irrevocably to reject the latest offer.

"Like the first offer, this grossly undervalues our company. It is still an attempt to buy a valuable asset ridiculously cheaply," says CEO Nicolaas Vlok.

"Management and directors see far more value in Idion than DataMirror seems prepared to offer, and we do not expect the bid to succeed. We are in any case not looking for a buyer, and hope that this will be the end of the matter.

"We have a growing, successful and profitable international business to run."

Idion financial director Willem Richard says the group has taken exception to comments by DataMirror that Idion`s cash flow was negative.

He says Idion generated cash flows of R12.1 million from operating activities in the year to December 2001, and used R10.7 million in the previous 10-month financial period. This resulted in net cash of R1.4 million generated from operating activities for the 22-month period.

Both DataMirror and Idion management have been buying shares in the open market. DataMirror`s stake has been increased to 16.75%, while Idion management`s stake is now more than 44%.

Idion says although DataMirror claims to be the largest single shareholder, Vlok, with about 19.79 million shares, owns 17.58% of Idion`s issued share capital.

Although some of the institutional investors have been talking about not selling at less than R3 a share, Richard says management cannot comment on where it sees the value of the company.

However, he says the management shareholders have committed themselves in writing to holding onto their shares until the company`s independent advisory committee says an offer is a fair one, although that does not compel them to sell at that point.

"We have worked really hard to put a number of structures in place and build our channel model, and we are committed to see it through," he adds.

He says talks between the two companies are out of the question as long as the hostile bid is on the table.

Corporate communications director Corn'e Arnold says the board would have a fiduciary duty to listen to any offers if the bid were out of the picture, although Richard adds that the group believes it has a complete offering and would have to be convinced that any merger offer would bring something unique.

The Idion share was trading at 144c on the JSE by mid-morning today, up 11c or 8.3% from yesterday`s close.