Advtech Ltd.’s two largest investors voted against the re-election of the company’s incoming chairman and another independent director as the South African schools operator reiterated its opposition to a proposed takeover offer from competitor Curro Holdings Ltd.
Lead independent director Chris Boulle and director Brenda Gourley were re-elected at Advtech’s annual shareholders’ meeting in Johannesburg Tuesday, each receiving less than 59 percent of votes cast. Coronation Fund Managers Ltd. and Kagiso Asset Management (Pty) Ltd., which voted on 33.5 percent of Advtech stock, opposed the re-elections, Boulle said after the AGM. He also said he will replace Jeff Livingstone as chairman.
The voting results represent “resounding support from a majority of shareholders for the strategy and conduct of the board and management over the past year,” Boulle said.
Curro has made a “conditional firm intention offer” for the equivalent of 13 rand ($1.03) an Advtech share. The share-swap proposal also includes a 50 percent cash payout for investors who don’t want to accept Curro’s stock. Advtech’s board, which says it’s yet to receive a formal offer, broke off talks with Curro last week after deciding the deal wasn’t in the company’s best interests.
Curro’s offer is open until the close of business on Tuesday, the company said in an e-mailed statement. If it’s not accepted, “Curro will consider its options available and will revert to its shareholders in due course,” it said.
There were a large number of reasons for the decision to reject Curro’s proposal, Frank Thompson, Advtech’s interim chief executive officer, said Tuesday. These included concerns about the company’s reputation and brands, differences in culture of the two companies and whether Curro could continue to fund Advtech’s growth plans, Boulle said. There’s nothing preventing Curro from making an offer directly to shareholders, he said.
Should Curro succeed, it wouldn’t want to change the business, said Johan Holtzhausen, managing director of PSG Capital. PSG holds about 57 percent of Curro’s shares.
“It would be silly for us to pay a premium and then change values, ethos and brands,” he said at the meeting.
Any offer for Advtech should be firm and unconditional and “underpinned by a substantial cash element,” Boulle said at the meeting.
Both Kagiso and Coronation have said they’re disappointed the operator of Trinityhouse and Crawford Schools didn’t let shareholders vote on Curro’s proposal to buy Advtech.
The issues raised by Advtech’s board that don’t relate to the offer price are “relevant but they are manageable,” Simon Anderssen, a Kagiso representative, said at the meeting.
Coronation is “still digesting the results of the AGM and the process going forward,” the company said on Tuesday.
Advtech’s board commits to continue to engage with Kagiso and Coronation “in a proactive manner to try and resolve their concerns,” Boulle said after reading out the results of the vote at the meeting.
Advtech has also seen heightened interest from other parties and received a number of expressions of interest in exploratory discussions, although none were explicitly in relation to a potential takeover of the company, Thompson said.
Several parents whose children attend Advtech schools expressed support for the board at the AGM and concern that a Curro takeover wouldn’t be positive for the company. At least one parent said he’d vote with his feet if the proposed takeover succeeded.
“I’d be finding a new school for my daughter, 100 percent,” said Nicholas Reeks. “I chose Trinityhouse where my daughter is for the morals, the level of education and the development that my child gets.”