Kagiso Tiso Holdings (“KTH”) has upped the ante in its already impressive Black Economic Empowerment (BEE) march by announcing yesterday a firm intention to buyout minorities in JSE listed media operation Kagiso Media.
Veteran BEE analyst Ajay Lalu, from Black Lite Consulting, described the KTH’s move as “extraordinary” in reflecting maturity of the black owned and controlled investment holding companies like KTH. “Im encouraged by how KTH has outgrown the tendency of BEE players to focus on small and passive investment stakes to becoming a player interested in total control of productive assets,” said Lalu. This and perhaps the Sekunjalo Media deal resonate well with the call for BBBEE to migrate into the creation of black industrialists”. Lalu said, “I believe that this will give Kagiso Media Limited a significant advantage in a highly regulated industry like media.”
Kagiso Media is invested in a large portfolio of media assets and largely commercial radio stations. These include East Coast Radio (100%), Jacaranda FM (80%), OFM (24.9%), Heart 104.9 (20%), Gagasi 99.5 (20%), Kaya FM (47.5%) and MediaMark (50.01%). The company also features Juta (100%), Knowledge Factory (70%), Kagiso Vantage (50%) and Kaufman Levin Associates (89.99%). There is also Gloo Digital Design (60%) and Kagiso.MSN (100%) and Urban Brew Studios (50.1%).
KTH currently owns 51.1% of Kagiso Media owing to the fact that it played a role in the establishment of of the media operation and its listing in 1997 and under the direction of the late BEE doyen Eric Molobi. KTH has roots stretching back to the early phase of BEE. It came out of the Kagiso Trust Investment established under the leadership of Molobi in 1993. Kagiso Trust Investment merged with Tiso Group in July 2011 to form KTH which boast net asset value of about R9bn.
KTH has offered Kagiso Media minority shareholders a cum dividend cash consideration of R28.50 per share. The company said its offer represents a 34.5% premium to the 30 day VWAP prior to Kagiso Media cautionary announcement on 10 June 2013. Kagiso Media shares were excited by the news with the share price jumping 17.1% or 400c to close at R27.35 yesterday.
The deal will be subject to a vote by shareholders and regulatory approvals. If successful, KTH will delist Kagiso Media from the JSE.
KTH said it was moving to buyout minorities in Kagiso Media as part of a broader strategy to consolidate its asset base. Vuyisa Nkonyeni, CEO of KTH said “KML (Kagiso Media) has always been a key investment and we aim to build on its success. This transaction forms part of the broader KTH investment strategy and also contributes positively to the transformation of a key sector of the economy.”