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Primedia tentacles fasten on leisure emp... Sanlam joins the lane heading out of vio... Rich harvest from Coronation's black em... Coega waits for the state's mov... Barlows SA spreads into Australia's pain... Denel acting MD shoots from the hip on c... Gold Fields steels itself for the... Market approves of MGX's full house... |
Primedia tentacles fasten on leisure empire
Interleisure may be won, writes and MARCIA KLEIN and THABO KOBOKOANE
The offer is substantially higher than the widely speculated initial offer of R1.4-billion and in line with Primedia's acquisitive appetite and willingness to pay a significant premium to net asset value for investments it considers strategic. Interleisure has a market capitalisation of R1.5-billion, valuing the 44.3% stake at just R670-million. If Primedia has, indeed, upped its offer, its move effectively wipes out rival media group Sasani whose bid is rumoured to be R1.2-billion. William Kirsh, chief executive of Primedia, denied he had increased his offer but a cautionary out on Friday states that negotiations in respect of "material acquisitions" are at an advanced stage and that an announcement is expected shortly. Sources say that while Servgro had initially been excited at prospects of a deal with Sasani because of its strong empowerment component, the latest offer has changed all that. "With the latest offer from Primedia, Servgro seems to have changed its tune and fallen for the carrot. What is empowerment compared to that kind of price," says a source close to the talks. Servgro was unavailable for comment at the time of going to press. Rivalry between the two groups goes back to January when Mervyn King and Eric Ellerine left the Primedia board to join that of Sasani. Both Sasani and Primedia have been locked in a bitter battle since Servgro's decision to unbundle, which included the sale of its Interleisure stake. Kersaf , which jointly controls Interleisure with Servgro (it holds 37%) and has pre-emptive rights on the stake, has been decidedly vague on its intentions. David Coutts-Trotter, group financial director at Kersaf, says the group is "evaluating all its options". An announcement will be out soon. Earlier this week there were rumours that Sasani had pulled out of the race for Interleisure, but these were quashed by chairman Nic Frangos. Interleisure, whose assets include Ster Kinekor, Computicket and Cinemark, has an 20% interest in Sasani and recently sold its 50% stake in Video Lab Group to Sasani. Significantly, it has a 20% interest in Station for the Nation - a consortium that includes Thebe's Moribo and Kerry Packer's Nine Network Australia, and a front-runner for the third free-to-air television licence. Many analysts believe this to be the prize possession, hence Primedia's increased offer. A successful bid by Primedia for Interleisure would add much weight to its mushrooming media empire. It already has the lion's share of radio stations in Gauteng (although Kirsh argues that because not all are controlling stakes, its interests fall within the ambit of IBA restrictions on media ownership and control). According to reports, it also has its hands in no fewer than two bids for the free-to-air television licence (three if it wins Interleisure). Primedia's assets include Radio 702 and Highveld Stereo. In October it bought Highveld via the Africa-on-Air consortium for R320-million, outbidding the nearest competitor by a margin of R190-million. With a high market rating - it is on a price-earnings ratio of 45, it is in a good position to use its expensive paper to fund acquisitions.
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