Cognition’s bid for Private Property stake raises hackles
Caxton at centre of contentious deal as media magnate William Kirsh squares up to block it
Niche technology player Cognition Holdings hosts an intriguing general meeting on Friday where shareholders will be asked to vote on the acquisition of a 50.1% stake in online real estate marketing platform Private Property for R127m.
The deal, on paper, has merit as cash-flush Cognition is determined to construct new operational platforms in the digital space – a development that might create more market interest in the much-overlooked company.
But the deal has also raised the hackles of certain shareholders – namely media magnate William Kirsh, who has formed a voting block to oppose the transaction.
There are a number of contentious issues. First, the vendor of the controlling stake in Private Property is media conglomerate Caxton, which also holds a 34.7% stake in Cognition.
The price of the scrip settled deal of 120c/share, which will increase Caxton’s stake to about 63%, has certainly irked Kirsh, who sees a fairer value between 180c/share to 200c/share. In its 2018 annual report Caxton reflected its stake in Cognition on a cost less accumulated impairment basis at R71m – equivalent to about 150c/share.
To make matters worse, minorities are being asked to waive their rights to a mandatory offer at 120c/share.
The outcome of the deal is a near a fait accompli because of the votes of certain Cognition directors, who hold a large block of shares and are considered “Independent Shareholders” for the purposes of voting.
Kirsh has openly questioned their independence, contending that their “salaries, directors’ fees and reputations” are now very much under Caxton’s control.
If the Private Property transaction is voted through, Kirsh has already notified the TRP (Takeover Regulation Panel) to review all facets of the deal.