MicroMega ticks off all conditions of Nosa deal
28 January 2014
Posted by: Author: Asha Speckman
Author: Asha Speckman (Business Report)
Johannesburg - All conditions to the MicroMega takeover of Chinese firm Nosa Global for R35 million had been fulfilled, MicroMega announced yesterday.
Hong Kong-based Nosa was owned by MicroMega chairman and majority shareholder Dave King who sold it to MicroMega to settle his 13 year-long tax dispute with the SA Revenue Service (Sars) and the Reserve Bank.
Last year, the parties ended the haggling over a tax assessment of more than R3.2 billion. King paid R700 million to settle claims against him and various family trusts. The trusts had allegedly realised more than R1bn in profits from the sale of shares in King’s former company Specialised Outsourcing during the 1997/98 stock market boom. He maintained that the profits were of a capital rather than revenue nature.
MicroMega said yesterday: "A specific requirement of this settlement was that Mr King’s family repatriate business assets that have been held overseas into South Africa. [Nosa] is one of those assets.”
King and MicroMega entered into the acquisition agreement on October 11 last year. It is categorised as a related party transaction. The purchase was settled in cash and the issue of 2.2 million MicroMega shares to the King Family Trust at R8 a share. The family trust’s stake rose from 75.5 percent to 77 percent.
Goodwill and other intangibles amounting to under R27.3m will arise from the acquisition.
An independent expert who was appointed by the MicroMega board and approved by the JSE concluded that the acquisition terms were fair. The opinion is open for inspection for 28 days from yesterday.
Nosa provides audit, certification and training services to private and public organisations in China, Brazil and Peru in occupational health and safety standards. MicroMega said the acquisition ensured that the King family’s operational business interests were vested in one legal entity.
Corporate governance analyst Lynn McGregor said a situation where the owner was also the chairman was not advisable. "The difficulty is that you are not independent.”
However, she said one would have to consider the voting rights held by the chairman, including how many shares he held, among other things.
For MicroMega the deal propels it towards becoming an international leader in occupational health and safety services and assists with its expansion into Asia and Latin America.
Greg Morris, the chief executive of MicroMega, said: "We anticipate a strong earnings and cash flow contribution from the international business over the coming years.”
The stock lost 8.54 percent to close at R9.10 yesterday.
This article first appeared on iol.co.za.