Adapt CEO takes leave after report of violent attack
- Adapt IT CEO Sbu Shabalala has taken a leave of absence following a newspaper report that he was allegedly involved in ordering a violent attack.
- The company's share price tanked by more than 12% earlier on Monday following the Sunday Times report.
- The accusations against Shabalala come at a critical juncture for Adapt IT, which received a takeover offer from the Canadian company Volaris last month.
JSE-listed software company Adapt IT founder CEO Sbu Shabalala has taken a three-month leave of absence amid a report that accuses him of alleged involvement in a violent attack.
The Sunday Times reported that Neo Shabalala filed for an urgent interdict against her husband, Sbu Shabalala. She accused him in an affidavit of ordering an attack on a man she is now living with, who reportedly ended up in hospital after intruders entered their home, according to the newspaper.
"Given the divorce court proceedings and the inherently private nature of the matter, Mr Shabalala has been advised by his legal representatives to decline to make any statements at this stage," Shabalala's spokesperson told Fin24. "He will however be available to make a statement at some future time or on some future occasion when it is deemed fit."
"The allegations put into question the character of the CEO," said Chantal Marx, head of investment research and content at FNB Wealth and Investments, of the newspaper report. "If these allegations prove to have substance to them, you could see a change at the helm of Adapt IT which may result in short-term instability in the managing of the company."
In a notice late on Monday, the board said that Shabalala has been granted a leave of absence for three months "to attend to personal matters". Tiffany Dunsdon, chief commercial officer of the company, will be the interim CEO.
Adapt IT's share price tanked by as much as 12% on Monday.
The accusations against Shabalala come at a critical juncture for Adapt IT, which received a takeover offer from the Canadian company Volaris last month. This followed a hostile bid from South African telecoms company, Huge Group.
Volaris is offering R6.50 per share, in cash. Adapt IT was trading at R6.30 on Wednesday. Volaris controls 70 companies across the world, with 150 offices in 30 countries, and is part of the Toronto-listed Constellation Software Group.
In January, Huge Group launched an "unsolicited" takeover bid for Adapt IT. Huge Group offered to exchange each Adapt IT share for 0.9 of Huge's shares, which works out to a value of R5.52 per share - or R800 million for the company.
Adapt IT has appointed an independent panel to review both bids, but shareholders holding more than 40% of its shares have already indicated that they would accept the Volaris bid.
On Monday, Adapt IT said in a statement that the fulfilment date for the Volaris scheme proposal has been extended another week, to 14 May. This is the second extension.
Marx says the accusations against Shabalala are unlikely to "fundamentally alter" the company and its investment case, but she described the possible short-term implications as "meaningful and destabilising".
Huge's CEO James Herbst would not be drawn into discussing Shabalala's legal issues, but indicated that his company's bid remained in place.
"We are committed to a process, our bid is substantively unconditional so ... we are not in a position to extricate ourselves from our offer, we can't walk away, we have no choice and so our offer will proceed," said Herbst.
Volaris did not respond to Fin24's request for comment.
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