In August hostility bubbled over when Mpact claimed Caxton had ulterior motives when it voted against executive pay resolutions at Mpact’s AGM, while Caxton in turn accused Mpact of inexplicable hostility. Picture: Antoine de Ras.
A dispute between Mpact and major shareholder Caxton took a new turn on Friday when Mpact urged its shareholders not to place “any reliance” on an announcement by Caxton about alleged customers threatening to desert the paper, plastics and recycling group.
Mpact said on Friday that claims that the Competition Tribunal had concluded that the commission was “wrong” to refuse to permit Caxton to make a separate merger filing, and that Caxton’s actions are “proof enough that is serious about an offer” was “incorrect.”
In June 2021 Caxton had applied to the commission for permission to make a separate filing for a merger, to acquire majority control over Mpact - it had already gained a 34 percent stake in Caxton. Mpact did not support the merger, and refused to agree to a joint merger filing.
The commission then refused Caxton’s application on the basis that it would not be fair to permit a separate filing. Caxton then approached the Tribunal, to appeal the commission’s decision.
In August hostility bubbled over when Mpact claimed Caxton had “ulterior motives” when it voted against executive pay resolutions at Mpact’s AGM, while Caxton in turn accused Mpact of “inexplicable hostility.”
Caxton is a printer and distributor of newspapers, books and magazines, and has a market capitalisation of about R3.5 billion on the JSE. Paper and plastics packaging business and recycler Mpact is worth R4.2bn.
Mpact said further on Friday that Caxton’s views on the tribunal ruling, released last week, contained “incorrect and misleading statements.”
Caxton said it anticipated a positive outcome for their fresh merger application to the commission.
However, Caxton said there were “significant risks inherent in Mpact’s ‘poison pill’ claims of customer flight”, which an Mpact merger would activate.
“Such customer flight would also impact Caxton as a 34% shareholder in Mpact.” To assist Caxton shareholders to appreciate the risks, Caxton said Mpact had made confidential submissions to the commission, which Caxton was not able to respond to at the time.
“Only when Caxton challenged the commission’s decision did Mpact allow Caxton’s legal advisors (not Caxton itself) access to the confidential information.”
But Caxton directors said they and chairman Paul Jenkins were already aware of the identity and fact of Golden Era’s objection to the proposed merger between Caxton and Mpact.
“The customer flight issue, i.e. that Golden Era would cease to do business with Mpact, and its business would be lost, if a merger filing is made to the competition authorities, was confidentially disclosed to Mr Jenkins, but subsequently brought into the public domain by Mpact,” Caxton said.
“The customer flight issue, was and remains of grave concern as it appears to comprise price sensitive information (PSI).”
“Mr Jenkins confronted Mpact with his view that the customer flight issue comprises PSI, but this was denied. Caxton then lodged a formal complaint to the JSE about Mpact’s non-disclosure of material, non-public PSI in contravention of the JSE listings requirements.”
A takeover regulation panel, based on an Mpact application, then gagged Caxton from talking to the market about a merger.
But Caxton said further last week that the JSE that Mpact’s executive directors had traded in Mpact shares of more than R15 million while in possession of this PSI. Caxton also objected to Mpact]s refusal of a shareholders’ meeting requisition from Caxton, to convene a shareholder meeting to consider the PSI issue.
The JSE continues to investigate the complaint. Caxton recently filed an appeal to the takeover special committee against the TRP’s gag order.
Caxton said also it sought to hold the Mpact board accountable for Mpact’s failure to disclose the risks of the historic cartel with Golden Era, in its reporting to shareholders. Mpact has denied claims of a cartel.
Caxton’s share price retreated 3.6 percent to R8.96 on Friday. Mpact’s share price increased 3.5 percent to R28.67.
edward.west@inl.co.za
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