O'Reilly buys 31% of South African newspaper group

TONY O'REILLY, chairman of Heinz Corporation and a personal friend of Nelson Mandela, agreed yesterday to acquire a 31 per cent stake in Argus Newspapers, South Africa's biggest newspaper group.

The acquisition follows the purchase last week of a 24.99 per cent stake in Newspaper Publishing, which owns the Independent, by Dr O'Reilly's Irish publishing company, Independent Newspapers.

Dr O'Reilly said he had decided to invest in South Africa despite the lingering political uncertainty because of his conviction that the country represented an attractive opportunity for foreign business.

Independent's stake will come via a listing of Argus Newspapers on the Johannesburg Stock Exchange. Argus Holdings, which owns the newspaper group, will give shares in the unbundled company to its own shareholders on a pro rata basis. Two of these - Johannesburg Consolidated Investment Company and Anglo- American Corporation - have agreed to sell their combined holding to Independent.

Liam Healy, Independent's chief executive, said the price would be about Ir20m ( pounds 19.2m), based on an agreed formula dependent on the newly listed company's share price following the listing.

Dr O'Reilly said the appeal of the Argus group was its dominant position in the South African newspaper market.

Argus owns 12 newspapers around the country, produced revenues of pounds 135m and pre-tax profits of pounds 10.5m last year, publishes 4 million newspapers a week, and has a daily circulation market share of 68 per cent in the country's four largest cities.

Anglo's grip on the South African newspaper market has been a source of controversy for many years and corporation executives made it clear yesterday that Independent Newspapers had done them a favour by unburdening them of a tiresome political albatross.

Dr O'Reilly owns 65 per cent of the newspapers in Ireland and has the fourth-largest newspaper group in Australia.