Listed technology group TeleMasters is moving forward with a deal that, if successful, will result in its two largest shareholders selling their shares to a BEE investor.
On Monday, the group said the transaction, which is subject to a number of conditions, was moving on to getting funding approval from lenders with the due diligence successfully completed.
The two shareholders received a nonbinding expression of interest from a BEE investor in July.
“The legal and financial due diligence investigation on Telemasters has successfully been completed by the acquirer. The acquirer has therefore proceeded with a submission of its funding application to a financial institution, the outcome of which will be communicated to shareholders in due course,” the group said in a note to investors.
Telemasters was founded in 2001 and listed on the JSE in March 2007.
The group specialises in custom telecom solutions for businesses. The primary segments it serves are voice, cloud PBX and internet service providers.
It is unclear if the conclusion of the transaction will result in Telemasters maintaining its listing on the local bourse. A number of technology players, including Adapt IT, Etion, Jasco, Alaris and Alviva, have left the exchange in recent years.
If a formal offer is made and accepted, it would result in a change of control of Telemasters and a mandatory offer being made to the remaining shareholders in the company on the same terms.
Local takeover rules stipulate that if any party buys more than 35% of a company’s shares, it triggers a mandatory offer to all the other shareholders. Part of the rationale for this is to protect minority shareholders from the whims of large investors. Special resolutions usually require a two-thirds vote to be passed. Therefore, when a particular investor reaches 35% of ownership, it can effectively block such resolutions unilaterally.
A lightly traded stock, Telemasters’ share price was unchanged at R1.05 on Monday. It is up 31.25% so far in 2024.
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