Johannesburg - Blackstar, the investment holding company
dually listed on the London Stock Exchange's AIM and the JSE's AltX markets, is set
to merge with Mvelaphanda Group (MVG) in a transaction that values the
combined entities at an estimated R2.5bn.
The proposed merger will provide improved economies of scale
to warrant main board listings in London and Johannesburg as well as a 15%
premium for MVG shareholders who remain invested in the enlarged Blackstar
Andrew Bonamour, Blackstar founder and CEO, said: "We
are excited about the opportunity. It gives MVG shareholders a choice and
Blackstar some real scale and momentum. African investment is topical in London
and our dual listing and track record gives us a unique positioning in the market."
The merger has the support of Blackstar's shareholders as
well as MVG's founders, representative of almost 20% of its shareholder base,
who have provided support for Blackstar's bid.
The merger is being implemented through a scheme of
arrangement, which will be put to MVG shareholders early next year. In
September 2009, MVG announced a value unlocking strategy that resulted in the
sale of assets such as Life Healthcare and Mvelaserve.
"Mvela Group has been in wind down mode for almost two
years now. We believe that we can breathe new life into the remaining assets by
using our technical expertise and investment experience to unlock further value
for their shareholders," said Bonamour.
The balance of MVG's investments includes its interest in
struggling media group Avusa and Batho Bonke, the Absa empowerment structure,
which are more complex and are expected to take some time to deal with.
MVG's shareholders are being offered a flexible combination
of Blackstar shares and cash, which offers the choice of remaining invested in
a more sustainable and actively managed group or cashing out in a short timeframe.
Blackstar said it had developed a six-year track record of
outperformance on its investments, delivering an internal rate of return of 35%
on its assets since inception. It is this expertise that Blackstar will need to
leverage to manage MVG's remaining investments, including Avusa [JSE:AVU].