Caxton-Mpact takeover deal tension boils over as parties struggle to find common ground

Caxton has been trying to acquire control of Mpact for years, especially after it built up its shareholding in the company to 34% over the past two years. But both companies have accused each other of having ulterior motives in the potential deal.
In the JSE’s more than R10-trillion investment universe, Caxton and Mpact are hardly household or significant names.
Caxton, a printer and distributor of newspapers, books and magazines, is worth R3.2-billion on the JSE. Meanwhile, Mpact is a paper and plastics packaging business and recycler worth R4.3-billion. Mpact is majority owned by Caxton, which holds 34% in the company.
For the most part, Mpact has performed well and created value for Caxton since the former was spun out of Mondi and listed on the JSE in May 2011. Mpact was listed at R13.60 in 2011, with its share price running in the following years until it hit a low of R1.11 in the early days of the Covid pandemic in March 2020. But its share price has since recovered by more than 2,000% closing at R28.97 on Monday, 15 August — creating a lot of value for Caxton over the years.
Although Caxton and Mpact are relatively small on the JSE, the goings-on at both companies will reverberate across the local bourse and add to many incidents of sour takeover battles in corporate South Africa. Caxton has been trying to acquire control of Mpact for years, especially after it built up its shareholding in the company to 34% over the past two years. Caxton’s ownership of Mpact would be closer to the 35% mark, triggering the former to make a mandatory offer to Mpact shareholders to take full control of the company, as is required by competition laws. Caxton has stated its intention to do so, but its negotiations with Mpact have gone awry, and tension between both companies has boiled over.
The AGM that turned sour
Caxton is now considering legal action against the board of Mpact for comments made by its CEO Bruce Strong about Caxton’s vote on the pay of non-executive directors at Mpact’s annual general meeting (AGM) on 2 June.
At the meeting, Caxton used its 34% shareholding to prevent the passing of a special resolution that was needed to pay fees to Mpact non-executive directors. These fees are paid to the directors for serving on the board. The special resolution received 62.6% support from Mpact shareholders, falling short of the ...