- The Takeover Regulation Panel has asked Huge Group to remove two videos from its website relating to the Adapt IT acquisition.
- Huge made an offer to purchase Adapt IT for R800 million through a share swap agreement.
- Huge faces competition from Canada's Volaris Group, which is offering shareholders R6.50 cash, for each share.
Huge Group has once again found itself in the crosshairs of a regulator, this time regarding videos targeted at shareholders of Adapt IT, a software company the group has made a bid to acquire.
The two videos in question, which had been published on Huge Group's website, are aimed to convince Adapt IT shareholders to accept its offer to purchase the company.
On Thursday, Huge released a statement that it had been notified by the Takeover Regulation Panel (TRP) to remove the videos relating to its bid to acquire Adapt IT from its website. The group had earlier been the subject of a Financial Sector Conduct Authority investigation, regarding share price manipulation, which found insufficient evidence against Huge.
Huge made an offer to acquire 100% of Adapt IT in an R800 million share-swap deal that would see 0.9 Huge shares offered for every Adapt IT share tendered. The swap ratio is based on a reference price of R6.13 and an implied price of R5.52 per Adapt IT share. But it faces competition from Volaris Group, which is offering shareholders R6.50 cash for each share.
The videos, which have since been taken down, highlighted Huge’s successes under the leadership of its CEO James Herbst, while pointing out shortcomings in the Volaris deal and the benefits of Huge's offer.
Huge’s COO, Andy Openshaw, waxed lyrical about Herbst’s prowess, explaining that during his tenure, the company’s market value had grown 37 times, from R30 million to R1.1 billion.
"He's a brilliant dealmaker, he’s a corporate finance professional and an exceptional negotiator," said Openshaw.
"The Huge offer is a shareholder-centred offer, it’s about you, the Adapt IT shareholder; one should ask, is the Volaris offer about you or is it about Adapt IT's two most senior executives?" he asked.
Herbst, who also appeared on the video, told shareholders that they will not get an "upside" from Volaris' cash offer.
The videos also laid out the benefits of keeping Adapt IT in South Africa, rather than moving it to Canada where Volaris is based and its parent company, Constellation Software, is listed.
But the TRP did not agree, saying that Huge should have approached it for permission to post the videos. It seems that Huge will try to put up the videos again, with Herbst saying on Thursday that the group will first seek the TRP's approval.
Adapt IT could not respond to the allegations made by Huge at the time of publishing.
The TRP’s response to Huge’s video blunder follows a statement from Adapt IT on Wednesday, warning shareholders about inaccurate information making its rounds, to the effect that they were meant to decide on accepting the Huge offer on Thursday.