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AET
AET
AET - Alert - Acquisition of the business of Steel Giant and Withdrawal of
Cautionary
Alert Steel Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 2003/005144/06)
(JSE code: AET & ISIN: ZAE000092847)
("Alert" or "the company")
ACQUISITION OF THE BUSINESS OF STEEL GIANT (PTY) LIMITED AND WITHDRAWAL OF
CAUTIONARY ANNOUNCEMENT
1 Introduction
Shareholders are advised that, further to the cautionary announcement dated
5 July 2007, Alert has entered into an agreement on 20 August 2007 for the
acquisition of the Steel Giant (Pty) Limited ("Steel Giant") business and
sale assets as a going concern ("the Steel Giant transaction").
2 Background to Steel Giant
2.1 The Steel Giant operations are similar to the Alert operations being a
retailer of prime steel, building materials, plumbing and hardware
products.
2.2 Steel Giant has four retail operations situated on the West Rand of
Gauteng and the North West Province.
3 Terms of the Steel Giant transaction
3.1 The purchase consideration payable in terms of the Steel Giant
transaction is a maximum of R12 000 000 plus the assumed liabilities,
subject to adjustment as set out hereunder. The purchase consideration
will be discharged as follows:
- R3 000 000 in cash on the closing date;
- R3 000 000 by way of the issue and allotment of 1 714 285 Alert
ordinary shares at an issue price of 175 cents per share, being a
premium to the 30 day weighted average market price at the time
that the Steel Giant transaction was entered into;
- a further R3 000 000 in cash within six months after the closing
date;
- the balance of the purchase consideration within seven days after
the June 2009 profits have been determined by way of the issue
and allotment of Alert ordinary shares at an issue price of 175
cents per share, being a premium to the 30 day weighted average
market price at the time that the Steel Giant transaction was
entered into; and
- the purchase consideration may be reduced, depending upon the
level of profits achieved by the Steel Giant business in the
financial years ending June 2008 and June 2009.
3.2 The key management of Steel Giant have entered into written employment
contracts and confidentiality and restraint agreements with Alert.
4 Rationale for the acquisition
The rationale for the Steel Giant transaction is inter alia as follows:
- The business operations of Alert and Steel Giant are similar and the
Steel Giant transaction will enhance the geographical footprint of
Alert with its retail outlets to increase from the current 11 retail
outlets to 15 retail outlets.
- The Steel Giant transaction will enhance the group`s critical mass.
5 Conditions precedent to the Steel Giant transaction
The Steel Giant transaction is subject, inter alia, to the following
conditions precedent:
- Cession and delegation of the premises leases to Alert and written
consent to the cession of material contracts; and
- Approval of the transaction by the Competition Commission.
6 Unaudited pro forma financial effects of the transaction
No financial effects are disclosed as the value of the Steel Giant
transaction is less than 5% of the market capitalisation of Alert.
7 Withdrawal of cautionary announcement
Caution is no longer required to be exercised by shareholders when dealing
in their securities.
Designated Adviser
Exchange Sponsors (Pty) Limited
Attorneys
Fuxmans Inc.
Johannesburg
22 August 2007
Date: 22/08/2007 08:30:01 Produced by the JSE SENS Department.
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