Cognition weathers Private Property storm
Deal is done after shareholders cause stink about controversial deal and the absence of directors at AGM
Cognition Holdings, a niche technology player, endured a long and stormy general meeting on Friday to pass resolutions related to its proposed acquisition of the Private Property online real estate portal for R127m.
Cognition will acquire a majority stake in Private Property from printing and publishing group Caxton. Caxton is a 34.9% shareholder in Cognition and will boost its stake to about 63% after taking scrip to settle the Private Property deal.
The meeting got off to a fractious start when significant minority shareholder and media magnate William Kirsh, as well as shareholder activists Chris Logan and Albie Cilliers, took exception at five directors, including CEO Mike Smith and chairman Ashvin Mancha, being absent. They called for an adjournment of the meeting, arguing that the directors’ absence precluded shareholders questioning them about the Private Property deal.
Cognition non-executive director Roger Pitt, who served as chairman, explained that Smith and Mancha had taken ill and could not travel to the meeting. Logan asked why Smith and Mancha could not dial in to the meeting as other shareholders had done. He suggested that by not postponing the meeting Cognition set a new low in corporate governance.
Logan noted that other listed companies Grand Parade Investments and Tsogo Sun had this year postponed shareholder meetings on “less material grounds”.
However, Pitt ruled there was no merit in postponing the meeting. There was also resistance to Pitt chairing the meeting. Logan noted that Pitt is a director of Merchantec, which serves as Cognition’s sponsor and corporate adviser.
Cognition and Caxton non-executive director Paul Jenkins pointed out that Pitt did not have to exercise a vote or rule on any matters.
Directors were interrogated at length on Cognition’s new strategic vision and whether Private Property could compete with market leader Property24, which is controlled by technology giant Naspers.
Jenkins said Caxton was putting one of its best, “if not the best”, digital assets into Cognition. He said Private Property was generating healthy cash flows and a healthy return on investment. “There are significant synergies and benefits in Cognition acquiring it.”
After nearly two hours, the meeting finally voted on the special and ordinary resolutions, which were passed with margins of 80.47% to 88.58%.