TRP slams Novus and its chairman Zetler, slaps R55m onto Mustek takeover cost

Key topics.TRP rules Novus acted in concert with Numus in Mustek takeover R55m added to offer price after higher share purchase uncovered Novus chairman Zetler named central figure in alleged misconduct.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..By Alec Hogg.If you ever needed proof that South African regulation has sharp teeth, this morning’s SENS announcement detailing a fascinating Takeover Regulation Panel (TRP) ruling confirms it. The document is a 119-page analysis of corporate arrogance and alleged conscious lying by Novus, a printing and packaging group, and its financial facilitator, Numus Capital. Bottom line is that Novus is being instructed to pay 18% more to minorities who hold the almost 23m shares it does not yet own - a hefty R55m increase from R297m to R352m in the cost of the takeover. Earlier this week, Novus said it will appeal the ruling. Given the stakes and structure of the Novus directorate, this is unsurprising. The TRP names Novus's non-executive chairman, Adrian Zetler, as the central character in the farce. Making matters worse, Zetler and Novus CEO André van der Veen are colleagues at A² Investment Partners.For Mustek shareholders, the headline news is spectacular: they are set to receive an additional R55m, with the price they will receive rising from R13.00 to R15.41 per share. But more relevant to SA’s broader business sector is the way the TRP has exposed misconduct by the former printing arm of Napers, which was unbundled in 2017. The higher price is a result of the TRP’s finding that Novus and Numus Capital were acting in concert while claiming to be independent. The back story provides a fascinating, if somewhat sobering glimpse into the dark arts of "regulatory arbitrage" and corporate ethics.The "Suite 704" ConnectionAt the heart of the TRP’s ruling is the relationship between Novus (the acquirer) and Numus (its broker). They claimed to be independent entities operating at arm's length. Novus argued Numus was just an execution broker; Numus claimed its hedge fund bought Mustek shares based on its own "independent analysis."The TRP report says this was a bald-faced lie it didn’t buy after dismantling the defence with forensic precision.The ruling portrays "structural integration" between Novus and Numus that borders on the comical. It positions the Novus chairman Zetler as the strategic force behind Paarl-based group’s bid. And says he was actually operating out of Numus’s base — Suite 704, 76 Regent Road, Sea Point. More damning still, the TRP found Zetler and Numus director Isaac Benatar weren’t even in separate offices - they allegedly shared a desk while orchestrating the accumulation of Mustek stock. Yet their defence was to claim the absolute independence, that the companies operated absolutely at arm's length. The Panel found that instructions for trades worth millions of Rands were given verbally, with no paper trail. Any rational mind will see this as a deliberate attempt to bypass corporate governance compliance. The alleged subterfuge was unravelled through internal emails exposed by the TRP process, showing that Numus was sending "deal recaps" to Novus CFO Craig Wright, copying his chairman, Zetler, via a private email address. The "Coincidence" DefenceThe defence mounted by Novus and Numus relied heavily on what the TRP called a "series of remarkable coincidences."It asked the TRP to believe Numus had independently established a Mustek-specific mandate 14 months before the offer - simply for "routine preparation." At the same time, the Numus hedge fund began buying illiquid Mustek stock. And targeted the same price levels (R13.00) as Novus. Both apparently purely by chance.The TRP’s reading of this is withering: "At some point, the accumulation of required coincidences crosses the threshold from possible to implausible to incredible."The final nail appears to be Novus's own board minutes. While telling the regulator its CFD (Contract for Difference) positions were merely "derivatives" that didn't require disclosure, internally, these positions were described in communications to directors as "shareholding," "equity," and "funding" to gain "absolute control." As the Panel noted, you cannot disclaim to the regulator what you claim to your board. The R15.41 "Oops" MomentSo, why the sudden R55m increase in the takeover price, with the forced adjustment to offer shareholders R15.41?This is where the "concert party" finding bites hard. Under Regulation 111(6) of the Companies Act, if any member of an associated (concert) party buys shares at a price higher than the offer price during the offer period, the offer must be increased to match that highest price for all shareholders.It turns out that on 28 November 2024 — after the offer was announced — the Numus hedge fund purchased 3,000 Mustek shares at R15.41 - a R46 230 purchase that would eventually cost its client R55m (and millions more in legal fees and management time). Numus was betting that nobody would uncover the proper relationship between the parties. A terrible call as it turned out. The TRP’s ruling effectively says: "Nice try. You were acting in concert from the start. That R15.41 purchase sets the floor. Pay up."A Wake-Up Call for SA IncThis ruling is significant beyond just the Mustek transaction. It sends a clear message about the abuse of CFDs and "friendly" brokers, who creep into positions that could bring them close to controlling companies without alerting the market, in other words, cheating the system. For too long, players have used the "synthetic" nature of CFDs to argue they don't hold a "beneficial interest" in the underlying shares, thus dodging the 5% disclosure thresholds. The TRP has shown it understands precisely what is actually happening and drawn a line in the sand: if you control the disposition of the shares, it’s a beneficial interest. Period.The Panel also tore into the printing company’s "Chinese Walls" defence, noting that you can’t have information barriers when the client and the broker are effectively the same team sitting in the same room.Context for ShareholdersFor Mustek shareholders, this is an apparent windfall: they will receive R15.41 per share, up from R13. But more importantly, this is a victory for transparency and exposes a dark side in how both Novus and Numis conduct business. The TRP report strips away the veneer of complex financial engineering to reveal a very different underlying reality. As the ruling states, this was a "sophisticated scheme... fundamentally undermining market integrity."Novus and Numus have been ordered to update all disclosures and announce the new price immediately. They have appealed to the Takeover Special Committee, but given the sheer weight of documentary evidence now in the public domain — emails, trade logs, and lease agreements — the hill to climb is steep.Ultimately, sunlight remains the best disinfectant. And today, by releasing the 119-page report, the TRP pulled back the curtains at Suite 704, Regent Road. Novus management and shareholders are in an inevitable position. The TRP alleges devious action by the chairman and, by association, the CEO, Zetler’s A² Investment Partners colleague. The financial cost, while substantial, could soon become secondary. The reputational damage could far outweigh that, especially if Novus loses its appeal after backing a chairman and CEO accused by the TRP of blatant dishonesty. Man in the middle, Novus chairman Zetler, is a CA and CFA charterholder who started his career at PwC, where he spent two years as a valuation specialist in the UK corporate finance team. For 12 years, he was an analyst and portfolio manager at Coronation Fund Managers.

TRP slams Novus and its chairman Zetler, slaps R55m onto Mustek takeover cost

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