BCX bid shrouded in mystery

By Iain Scott, ITWeb group consulting editor

Johannesburg, 02 May 2006

As market watchers puzzle over the identity of another potential bidder for Business Connexion (BCX), investors have rushed to make some money from the BCX share.

BCX, already targeted for acquisition by national telephone network operator Telkom, announced on Friday that it had received an expression of interest from another potential bidder.

According to a cautionary notice issued late in the afternoon, BCX is considering the expression of interest.

Investors piled into the BCX share as the news broke, pushing the share price 43c or 5.2% up to an 870c close. About 2.21 million shares were traded in 110 deals.

The share recorded a 12-month high of 895c on 22 March, after BCX announced Telkom had offered to buy the group.

This is the second time a mystery second bidder has expressed an interest for BCX. When Telkom was engaged in talks with BCX last year, another company, later identified as the Altron Group`s Bytes Technology Group (BTG), also approached the firm.

However, both bids failed as talks broke down over pricing.

Telkom approached BCX again in March, offering to pay R9 to buy the group by way of a scheme of arrangement.

A scheme of arrangement is essentially a way of structuring a bid. Normally, if a bid is accepted by shareholders owning more than 90% of a company, the bidder can force remaining shareholders to accept the offer on the same terms.

A scheme of arrangement proceeds with the approval of 75% of shareholders.

This time, BTG is not the second party. Although BTG chairman Dave Redshaw has gone on record as saying BTG would still be interested in BCX should the Telkom talks fail, the group has stated it is not the mystery bidder.

Analysts are in the dark as to who the newest suitor is, with most agreeing it is highly unlikely to be a locally-listed company.

However, there is little agreement on who the bidder might be, with guesses including T-Systems, EDS and the second national operator (SNO).

"I don`t think it`s anyone local," one analyst comments. "Definitely not an IT or telecoms company anyway. MTN`s buying in the Middle East, and that acquisition`s big enough to deal with at the moment.

"No one else big enough has a cautionary out. I know some guys are saying the SNO might be interested, but I think that`s only speculation at this stage. There have also been rumours that the SNO`s looking at DiData, so it`s really just guesswork."