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SHF
SHF
SHF - Steinhoff - Termination of Discussions with Amap
STEINHOFF INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration Number 1998/003951/06)
Share code: SHF & ISIN: ZAE000016176
("Steinhoff")
TERMINATION OF DISCUSSIONS REGARDING THE MERGER OF THE SOUTH AFRICAN
FURNITURE INTERESTS OF STEINHOFF AFRICA HOLDINGS (PROPRIETARY) LIMITED
("Steinhoff Africa") WITH THE BUSINESS OF AMALGAMATED APPLIANCE HOLDINGS
LIMITED ("Amap")
1. BACKGROUND
1.1 Steinhoff shareholders are referred to announcements released on
14 December 2006 and 5 March 2007 wherein it was announced that
agreement in principle had been reached to merge the furniture
interests of Steinhoff Africa ("the Steinfurn business") with the
business of Amap ("the merger"). Steinhoff shareholders are
further referred to the announcement released to Amap
shareholders today, 12 April 2007.
1.2 In terms of the merger, Steinhoff Africa, subject to certain
conditions precedent, would have disposed of the Steinfurn
business to Amap for a consideration of R1 152 million ("the
merger consideration"), to be settled via a combination of cash
and the issue of ordinary shares in Amap ("the Amap consideration
shares").
1.3 The values for Amap and the Steinfurn business were calculated on
a relative basis applying similar ratings and valuation metrics
to both Amap and the Steinfurn business. These valuations (based
on a historic price: earnings multiple of approximately 8 times)
were supported by the preliminary fair and reasonable opinion of
an independent professional expert to the independent directors
of Amap.
2. TERMINATION OF MERGER DISCUSSIONS
2.1 On 11 April 2007 Amap informed Steinhoff Africa that two of its
major shareholders (which collectively hold a substantial
interest in Amap`s issued share capital) ("the opposing
shareholders") have advised that, whilst they support the
rationale for the merger, they are not in agreement with the
relative valuation metrics of the merger. The opposing
shareholders indicated that they would only support the merger
should the Steinfurn business be valued at a substantial discount
to Amap.
2.2 The merger would have comprised a related party transaction in
terms of the Listings Requirements of the JSE Limited in respect
of which Steinhoff Africa would not have been permitted to vote.
The approval of the Amap opposing shareholders would therefore
have been a necessity in order to implement the relevant ordinary
and special resolutions pertaining to the merger.
2.3 The board of directors of Steinhoff Africa are of the opinion
that valuing Steinfurn at a discount to Amap does not fairly
reflect the value of Steinfurn and is thus not in the best
interest of Steinhoff and its shareholders. This view is
endorsed by offers from certain private equity groups, who have
approached Steinhoff Africa subsequent to the initial
announcement of the merger. These offers value Steinfurn, as a
standalone business, at a significant premium to the merger
consideration.
Accordingly, due to the likelihood of the conditions precedent to
which the merger would have been subject not all being fulfilled,
Steinhoff Africa and Amap have decided to terminate all
proceedings in regards to the merger.
2.4 Steinhoff shareholders are hereby advised that, in view of the
merger proceedings being terminated, the directors of Steinhoff
and Steinhoff Africa have accordingly entered into negotiations
with a view to selling the Steinfurn business to a consortium of
private equity investors. The envisaged transaction will include
the participation of management and the facilitation of
meaningful BEE.
Johannesburg
12 April 2007
Sponsor
PSG Capital
Date: 12/04/2007 12:40:48 Produced by the JSE SENS Department.
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