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BEG
BEG
BEG - Beige Holdings - Acquisition And Withdrawal Of Cautionary Announcement
BEIGE HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1997/006871/06)
("Beige" or "the company")
ISIN Code: ZAE000034161 Share code: BEG
ACQUISITION OF 80% OF THE ORDINARY SHARES IN AND THE CLAIMS AGAINST AMCOS
COSMETICS INTERNATIONAL (PROPRIETARY) LIMITED ("AMCOS") AND WITHDRAWAL OF
CAUTIONARY ANNOUNCEMENT
1. Introduction
Further to the cautionary announcement dated 14 June 2007, the Board of
Directors of Beige are pleased to announce the signing of heads of agreement
with Bowler Metcalf Limited (Proprietary) Limited ("Bowler" or "the Vendor") on
25 June 2007, in terms of which it will acquire 80% (eighty percent) of the
issued share capital in and the loan accounts against Amcos ("the Acquisition"),
with effect from 01 July 2007, subject to the fulfilment of the conditions
precedent set out in paragraph 5 below. The consideration for the Amcos shares
is R13 044 896, to be settled by a cash payment of R6 522 448 ("the Cash Portion
of the Purchase Price) and the allotment and issue of 26 089 792 Beige shares at
an issue price of 25 cents per share ("the Consideration Shares). The
consideration for the shareholder loans is R24 297 848 to be settled in cash in
eighteen equal monthly instalments. The consideration for the loan accounts is
cash neutral to Beige as it will be paid against the recovery of inventory,
accounts receivable and DTI grants received and, in the event of any shortfall,
such amount will be set-off against any remaining balance due to Bowler.
2. History and nature of business of Amcos
Amcos is a contract manufacturer and packer of toiletries and cosmetics for both
national chain stores and brand holders. Bowler acquired a strategic stake in
Amcos in 2003 to facilitate its entry into the contract filling industry and to
improve competitiveness in the international packaged goods arena.
3. Rationale for the Acquisition
The Acquisition will enable Beige to, inter alia:
- Further advance its position as the leader in contract manufacturing and
packing industry;
- enhance its operational ability through the integration of the Amcos
business with the existing Beige operations;
- grow and diversify its client and product portfolio;
- increase economies of scale in the business; and
- strengthen its sales and marketing capacity.
4. Financial effects of the Acquisition
The table below summarises the pro forma financial effects of the Transaction on
the published audited results of Beige for the year ended 31 March 2007, as
though the Transaction had been in effect from 01 April 2006 for income
statement purposes and at 31 March 2007 for balance sheet purposes. The Amcos
financial information was extracted from the management accounts for the six
months ended 31 December 2006 and annualised. The board are satisfied that this
is the most reliable financial information available as Amcos is a subsidiary of
a listed company and this information will have been consolidated in the
Vendor`s interim results. The pro forma financial effects, which are the
responsibility of the directors, have been prepared for illustrative purposes
only. Due to their nature, they may not fairly present Beige`s financial
position, changes in equity, result of operations or cash flows.
Year Ended 31 March 2007 Audited Pro Forma % Change
before the after the
Acquisition Acquisition
(i)
Earnings per share 2.21 3.31 49.55%
(iii)(iv)(v)(vii)
Headline earnings per 2.21 2.48 12.24%
share (iii)(iv)(v)(vii)
Fully diluted earnings 2.04 3.31 49.55%
per share
(iii)(iv)(v)(vii)
Fully diluted headline 2.04 2.29 12.54%
earnings per share
(iii)(iv)(v)(vii)
Net asset value per 9.13 9.64 5. 96%
share (ii)(iv)
Tangible net asset value 3.17 4.71 48.58%
per share (ii)(iv)
Fully diluted net asset 8.39 8.90 5.97%
value per share (ii)(iv)
Fully diluted tangible 2.92 4.34 48.97%
net asset value per
share (ii)(iv)
Weighted number of 771 065 797 155 3.38%
ordinary shares in issue
Fully diluted weighted 838 199 864 289 3.11%
number of ordinary
shares in issue
Ordinary shares in issue 771 065 797 155 3.38%
at year end
Fully diluted ordinary 838 199 864 289 3.11%
shares in issue at year
end
Notes:
The pro forma financial effects are based on the following assumptions:
(i) The published audited results for Beige for the year ended 31 March
2007.
(ii) The unaudited balance sheet of Amcos at 31 December 2006 as extracted
from the company`s management accounts.
(iii) The unaudited income statement of Amcos as extracted from the
company`s management accounts up to and including 31 December 2006 and
annualised to 12 months.
(iv) The adjustments in respect of the balance sheet were based on the
assumption that the Purchase Consideration was settled on 31 March
2007 through payment of the Cash Portion of the Purchase Price and the
issue of the Consideration Shares. The balance sheet of Amcos at 31
December 2006 showed negative net asset value of R1.7 million.
(v) The adjustments in respect of the income statement were based on the
assumptions that:
(a) the interest paid on the inter-company loan account, which loan
account has been acquired by Beige, would eliminate on consolidation;
(b) the Amcos acquisition was effective on 01 April 2006 and that the Cash
Portion of the Purchase Consideration was settled and the
Consideration Shares were issued on this date;
(c) there were no additional costs incurred relating to the Acquisition as
such costs would be written off against share premium; and
(d) in accordance with IFRS 3, negative goodwill arising on the
acquisition has been recognised through the income statement but has
been eliminated from the headline earnings calculation..
(vi) The adjustment to income tax was based on an assumed effective tax
rate of 29%.
(vii) Minority interest of 20% of Amcos profit after notional taxation has
been assumed.
5. Conditions Precedent
The Acquisition is subject to, inter alia, the following conditions precedent:
- the conclusion of final agreements;
- Beige conducting and completing to its satisfaction a due diligence
investigation on Amcos;
- Competition Commission approval.
6. Withdrawal of Cautionary Announcement
Following the publication of this announcement, the cautionary announcement has
been withdrawn and shareholders need no longer exercise caution when dealing in
the company`s securities on the JSE.
Johannesburg
03 July 2007
Designated Advisor Corporate Advisor to Beige
Arcay Moela Sponsors (Pty) Ltd Arcay Corporate Finance (Pty) Ltd
Date: 04/07/2007 12:13:00 Produced by the JSE SENS Department.
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