Caxton discloses the Mpact secrets


Let shareholders know

Caxton chair Paul Jenkins revealed all in an announcement published via Sens on Thursday, despite a ruling by the Takeover Regulation Panel that seeks to prevent disclosure.

He says Caxton’s merger application has led to numerous conflicts between Caxton and Mpact.

“In its August 2021 decision, the commission relied heavily on the prejudice that Mpact claimed it would suffer if Caxton was allowed to make a Rule 28 merger notification. In the tribunal’s ruling, the tribunal has found that the claimed customer flight prejudice triggered by a mere merger filing is an irrelevant consideration at this stage of a merger process.

“Caxton is aware from publicly disclosed information that confidential submissions concerning this alleged prejudice of customer flight were made (including by way of sworn affidavits) by both Mpact and its largest customer, multi-billion rand packaging firm Golden Era, during the course of the Rule 28 merger application.

“In this regard, Mpact claims that if Caxton is permitted to make a merger filing, this will have a ‘devastating impact’ and negative consequences for Mpact and its shareholders, in that it would trigger customer flight by Mpact’s largest customer,” according to the Sens announcement, signed by Jenkins.

“There are significant risks inherent in Mpact’s ‘poison pill’ claims of customer flight which an Mpact merger notification by Caxton will activate.

“Such customer flight would also impact Caxton, as a 34% shareholder in Mpact,” says Jenkins, motivating that the disclosure of the information is necessary to “assist Caxton shareholders to appreciate the risks”.

While information was shared with Caxton on a confidential basis, it was also apparent that some of the information claimed as confidential was known to Jenkins and Caxton already, through public sources or through the non-confidential versions of documents.

“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 Jenkins, but subsequently brought into the public domain by Mpact.

“The customer flight issue was and remains of grave concern as it appears to comprise price sensitive information,” says Caxton’s announcement on Thursday.

Caxton eventually lodged a formal complaint to the JSE about Mpact’s non-disclosure of material, non-public information and also made public statements about it.

Caxton also complained to the JSE that Mpact executives traded in Mpact shares to a value of more than R15 million while in possession of this price-sensitive information.

“Mpact apparently defends its position by suggesting that the customer flight issue is not certain and therefore not price sensitive information,” says Jenkins, although this argument was contradicted by the affidavits filed by Mpact in the various competition proceedings.


Caxton, as a 34% shareholder of Mpact, also seeks to hold the Mpact board accountable for Mpact’s failure to disclose the risks of the historic alleged cartel with Golden Era in its reporting to shareholders.

Jenkins says Caxton is obliged to advise its shareholders that Mpact and its largest carton board customer, competitor, co-cartel respondent in an ongoing prosecution, both opposed a merger filing by Caxton on the basis that if Caxton is permitted to make a merger filing, Golden Era will forthwith withdraw its custom from Mpact.

“According to Caxton’s own market information, Golden Era purchases nearly half of the carton board output of Mpact’s Springs mill, of some 45 000 tons, in addition to its purchase of tens of thousands of tons of corrugated board from Mpact.

“Independent sources confirm that Golden Era is already seeking alternative imported carton board sources of supply.

“Golden Era has previously threatened to withdraw its custom from Mpact, to extract commercial benefits from Mpact, and Mpact affords Golden Era unspecified benefits and favoured nation preferences, including pricing, in its purchase of carton board,” alleges Jenkins in the Sens announcement.

He reiterates that Mpact and Golden Era stand accused of cartel conduct, for which Mpact has admitted to and has received conditional corporate leniency from the commission, but Golden Era has denied its participation.

“Where undisclosed cartel activity in regard to Mpact and Golden Era has occurred or continues to occur, the commission may revoke Mpact’s current amnesty for its cartel participation with Golden Era and levy a fine on Mpact of up to 10% of its turnover,” he says.

New merger filing

Jenkins told Moneyweb that Caxton noted the reasons for the tribunal’s finding and is vindicated by the new decision to refer this matter back to the Competition Commission for re-consideration.

“The secret issue of customer flight by Golden Era, if Caxton makes a merger filing, is dealt with in a forthright manner by the tribunal. Mpact continues to insist that the identity of Golden Era is confidential, but the tribunal reasons reflect that the identity of the redacted party is known to Caxton from other sources.

“Caxton is of the view that it is now time for Mpact to disclose to shareholders that, on its own version of events, a large shadow looms over the affairs of Mpact, given the prospect of Caxton’s merger filing request being granted after re-consideration, and given the devastating consequences that customer flight will have on Mpact and its shareholders if a Caxton Rule 28 merger filing is made in the future.

“We had expected that with the disclosures in the reasons, Mpact would explain to its shareholders how the customer flight issue by Golden Era affects Mpact …

“Caxton discloses the relevant information regarding the merger ruling to its shareholders as this has material implications for Caxton and its shareholders,” says Jenkins.

Listen to both sides of the Caxton vs Mpact spat (or read the transcript of the interview with Mpact CEO Bruce Strong here and Caxton chair Paul Jenkins here):

Disclosure: Caxton’s majority shareholders are also majority shareholders in African Media Entertainment (AME), the owner of Moneyweb.

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