Takeover news boosts Prism

By Iain Scott, ITWeb group consulting editor

Johannesburg, 10 Feb 2006

The Prism share showed new life yesterday after news that Net1 plans to make an offer for the group.

Prism said late yesterday afternoon that Net1, a subsidiary of US-listed Net1 UEPS Technologies, had submitted a notice to the Prism board informing it of its firm intention to make an offer at R1.02 a share.

If the deal, which is subject to several conditions - including acceptance by shareholders owning at least 75% of Prism - is completed, Prism will be delisted from the JSE.

Prism says shareholders owning about 43% of its shares have entered into irrevocable undertakings to vote in favour of the deal.

Those shareholders include "certain Prism directors and employees".

Net1 UEPS Technologies, formerly listed on the JSE as Aplitec, has its operations and management headquartered in SA.

Net1 is a provider of an electronic payment system aimed at the unbanked and underbanked populations of developing economies.

Consolidation

There had been some speculation about a takeover of Prism, particularly after the group published a cautionary notice last month in the wake of what it described as abnormal share trading.

Although the notice referred to discussions with companies interested in buying Prism, Prism CEO Alvin Els downplayed talk of a possible takeover, saying such approaches were par for the course and that no formal negotiations were taking place.

He said sharp increases in the Prism share price might be related to a positive trading update issued in mid-January.

The cautionary notice, released after the market closed on 24 January, came after the share closed at 105c, having opened the year at just 71c. It closed at 107c on 25 January before losing steam and bottoming out at 80c on Wednesday.

Yesterday the share gained 19c or 23.8% to close at 99c after the group issued a statement relating to the Net1 offer.

An analyst says the deal makes sense. "Prism put out good results the other day, but if you look deeper into the figures you see that they`re under a bit of pressure in the chip and wireless market, which is pretty competitive at the moment.

"There`s bound to be a bit of consolidation in that market. And I think they [Prism and Net1] make a good fit." He adds that he believes R1.02c a share is not an unfair offer, given that Prism`s share price is "way up on its normal levels".

The share was trading 3c down at 96c at 10.24am today, with 952 982 shares having changed hands in 24 deals.