| Wed 19 Sep 2007, 12:16 | | S&B - Stefanutti & Bressan Holdings - Acquisition |
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SFB
SFB
S&B - Stefanutti & Bressan Holdings - Acquisition Announcement
Stefanutti & Bressan Holdings Limited
(formerly Stefanutti & Bressan Civils (Pty) Limited)
(Incorporated in the Republic of South Africa)
(Registration number 1996/003767/06)
Share code: SFB ISIN: ZAE000101903
("S&B")
Acquisition by Stefanutti & Bressan Holdings Limited of controlling
interests in Skelton & Plummer Investment Holding Company (Pty) Limited
("Skelton & Plummer") and Civil & Coastal Construction (Pty) Limited
("Civil & Coastal")
Acquisition of Skelton & Plummer
1. Introduction
Bridge Capital is authorised to announce that S&B has entered into an
agreement dated 14 September 2007 to acquire an 80.3% interest in
Skelton & Plummer as well as all the shareholders` loans from the
existing shareholders for a maximum amount of R68.2 million ("the
acquisition").
2. Skelton & Plummer`s Background
Skelton & Plummer is an investment holding company whose subsidiary
companies` principal activities are mechanical and electrical
construction, engineering design and project management, sales and
distribution of mining and plant supplies and consumables. The group
was established in the early 1980`s.
The issued shares of Skelton & Plummer are currently owned by the
Executive directors, management and Mowana Investments (Pty) Limited
("Mowana"), a BEE partner, who is also a major shareholder in S&B. Post
implementation key management will continue to hold a 19.7% interest in
Skelton & Plummer.
3. Rationale for the acquisition
Skelton & Plummer has skills in project management with engineering
expertise in mechanical and electrical construction. Through the
acquisition, S&B will acquire these niche skills which have evolved
over the past 25 years. These niche skills will serve to supplement its
current predominantly civil, engineering and construction skills base,
therefore resulting in an enhanced service offering to S&B clients.
Skelton & Plummer specialises in market segments not currently covered
by the operations of S&B. The acquisition will effectively diversify
the revenue stream of S&B and will assist in providing entry to new
markets.
4. Details of the acquisition
4.1. Acquisition Classification
The transaction is classified as a small related party transaction in
terms of the Listing Requirements of the JSE Limited ("Listings
Requirements"). Mowana, a major shareholder in S&B, is also a major
shareholder in the acquisition target, Skelton & Plummer.
In accordance with par 9.16 of the Listings Requirements, the articles of
association of Skelton & Plummer will be changed to conform to Schedule
10.
4.2. Fair and Reasonable Opinion
As required by the Listings Requirements, S&B is in the process of
appointing an independent professional expert to evaluate whether the
terms of the agreement are fair and reasonable. The fair and reasonable
opinion will be announced in due course and lie for inspection at the
company`s registered offices for a period of 28 days from the date of the
announcement.
4.3. Acquisition consideration
The aggregate acquisition consideration will carry a minimum value
of R60.1 million and a maximum value of R68.2 million and is
payable upon fulfillment of the conditions precedent set out under
4.4 below. The acquisition will be paid for entirely with cash. The
cash consideration will be funded from S&B`s existing cash
reserves.
The final consideration is dependent upon the profit after tax
("PAT") per the audited financials of Skelton & Plummer for the
period ending 31 December 2007 being in excess of R9 million, and
Skelton & Plummer`s net asset value not being less than R33.5
million. The asset base of Skelton & Plummer also includes a
property valued at R8.2 million. The final consideration payable
will increase above the minimum value should PAT exceed R9 million,
up to the maximum amount payable should PAT exceed R10 million.
4.4. Conditions Precedent
The transaction is subject to and conditional upon the fulfilment
of each of the following key conditions precedent:
4.4.1. The satisfactory completion by S&B of a due diligence
investigation;
4.4.2. The Conversion of Mowana`s (BEE shareholder) preference shares
into Skelton & Plummer ordinary shares;
4.4.3. The board of directors of S&B passing the required resolutions
for the approval of the transaction contemplated in the agreement;
4.4.4. The execution of a shareholders` agreement between S&B, the
remaining Skelton & Plummer Executives, and Skelton & Plummer;
4.4.5. To the extent required, the unconditional written approval of
the Competition Authorities to the transactions contemplated herein
having been obtained; and
4.4.6. To the extent required, receiving all regulatory approvals,
including that of the Securities Regulation Panel and/or its Executive
Director ruling that the transaction set out in the Agreement are exempt
from the Securities Regulation Code.
4.5. Effective Date
The effective date of the acquisition will be the first business
day following the fulfillment of the conditions precedent.
4.6. Pro forma financial effects of the acquisition
S&B was listed on the JSE on 3 August 2007. Set out in the table below
are the unaudited pro forma financial effects of the acquisition,
based on S&B`s forecasted earnings as per the prospectus published on
25 July 2007. For purposes of calculating Skelton & Plummer`s impact
on the results of S&B, Skelton & Plummer`s forecasted earnings are
assumed at R10 million as discussed in par 4.3 above. The unaudited
pro forma financial effects are presented for illustrative purposes
only, to provide information on the impact of the acquisition. The
unaudited pro forma financial effects are the responsibility of the
directors. Due to the nature of the unaudited pro forma financial
effects, they may not give a fair representation of S&B`s financial
position and the results of its operations after the acquisition, and
should also not be construed as a trading statement.
Before the After the Percentage
acquisition(1 acquisiti change (%)
) on
Earnings/ Headline earnings 91.2 94.1(2) 3.2%
per share (cents)
Diluted earnings/Headline 85.2 87.9(2) 3.2%
earnings per share (cents)
Net asset value per share 331.2 331.2(3) 0%
(cents)
Diluted net asset value per 311.2 311.2(3) 0%
share (cents)
Net tangible asset value per 267.6 237.8(3) -11.2%
share (cents)
Diluted net tangible asset 251.4 223.4(3) -11.2%
value per share (cents)
Notes:
1. Extracted from the prospectus of S&B as published on 25 July 2007,
representing the forecast results for the twelve months ending
29 February 2008, but with the number of shares used in the prospectus
having been adjusted to the actual number of shares issued.
2. Earnings and headline earnings per share in the "After the
acquisition" column have been based on the following assumptions:
a. S&B holds 80.3% of the issued share capital of Skelton & Plummer,
hence the 19.7% minority interest have been taken into account in
calculating attributable earnings;
b. A full 12 month period for both S&B as well as Skelton & Plummer was
used in calculating earnings in the `After the acquisition" column;
c. Skelton & Plummer`s results used in the preparation of the pro forma
financial effects are based on the profit warranty as per the transaction
agreement for the 12 months ending 31 December 2007;
d. S&B`s results used in the preparation of the pro forma financial
effects are based on the forecast earnings published in the prospectus
for the 12 months ending 29 February 2008;
e. The weighted average number of S&B shares in issue is 126 995 022
before and after the acquisition;
f. The diluted weighted average number of S&B shares in issue is 135
970 022 before and after the acquisition;
g. Interest foregone on the cash utilised by S&B to fund the
acquisition at a pre-tax rate of 9% per annum was taken into account.
3. Net asset value and net tangible asset value per share in the "After
the acquisition" column have been based on the following assumptions:
a. The balance sheet of Skelton & Plummer used in the preparation of
the pro forma financial effects was extracted from their audited
financial statements as at 31 December 2006;
b. The balance sheet of S&B used in the preparation of the pro forma
financial effects as at 28 February 2007 was extracted from the pro forma
results published in the prospectus;
c. The total number of S&B shares in issue is 139 380 867 before and
after the acquisition;
d. The total diluted number of S&B shares in issue is 148 355 867
before and after the acquisition.
Acquisition of Civil & Coastal
1. Introduction
S&B has entered into an agreement to purchase a 51% interest in Civil &
Coastal from its current shareholders, Mr S Allen and Mr G. Moore dated
17 September 2007, for a cash consideration of R20 million with an
option to purchase the remaining 49% in the period between 3 and 5
years post the effective date of the transaction. The transaction is
effective from 1 September 2007 should all the conditions precedent be
fulfilled.
In accordance with par 9.16 of the Listings Requirements, the articles of
association of Civil & Coastal will be amended to conform to Schedule 10.
2. Civil & Coastal`s Background
Civil & Coastal is a Cape Town based company that specialises in marine
civil engineering design and construction activities and to a lesser
extent is also involved in concrete repair and rehabilitation. Civil &
Coastal was established in 1992 by its current owners and operates
predominantly in the Western Cape and Angola. During the past 15 years
Civil & Coastal has attracted recognition for its innovation, superior
service and the timeous completion of projects.
3. Rationale for the transaction
Civil & Coastal specialises in disciplines and market segments that
will enhance the operations of S&B. The acquisition will effectively
diversify the revenue stream of S&B, enhance S&B`s geographical
footprint and provide access to an expanded client base.
4. Pro forma financial effects of the acquisition
Set out in the table below are the unaudited pro forma financial effects
of the acquisition, based on S&B`s forecasted earnings as per the
prospectus published on 25 July 2007. For purposes of calculating Civil &
Coastal`s impact on the results of S&B, Civil & Coastal`s earnings are
extracted from their audited financial statements for the 12 months ended
28 February 2007. The unaudited pro forma financial effects are presented
for illustrative purposes only, to provide information on the impact of
the acquisition. The unaudited pro forma financial effects are the
responsibility of the directors. Due to the nature of the unaudited pro
forma financial effects, they may not give a fair representation of S&B`s
financial position and the results of its operations after the
acquisition, and should also not be construed as a trading statement.
Before the After the Percentag
acquisition acquisiti e change
(1) on (%)
Earnings/ Headline earnings per 91.2 94.6(2) 3.7%
share (cents)
Diluted earnings/Headline 85.2 88.4(2) 3.7%
earnings per share (cents)
Net asset value per share 331.2 331.2(3) 0%
(cents)
Diluted net asset value per 311.2 311.2(3) 0%
share (cents)
Net tangible asset value per 267.6 258.1(3) -3.6%
share (cents)
Diluted net tangible asset 251.4 242.5(3) -3.6%
value per share (cents)
Notes:
1. Extracted from the prospectus of S&B as published on 25 July 2007,
representing the forecast results for the twelve months ending
29 February 2008, but with the number of shares used in the prospectus
having been adjusted to the actual number of shares issued.
2. Earnings and headline earnings per share in the "After the
acquisition" column have been based on the following assumptions:
a. S&B holds 51% of the issued share capital of Civil & Coastal, hence
the 49% minority interest have been taken into account in calculating
attributable earnings;
b. A full 12 month period for both S&B as well as Civil & Coastal was
used in calculating earnings in the `After the acquisition" column;
c. Civil & Coastal`s results used in the preparation of the pro forma
financial effects are based on their audited financial statements for the
12 months ending 28 February 2007;
d. S&B`s results used in the preparation of the pro forma financial
effects are based on the forecast earnings published in the prospectus
for the 12 months ending 29 February 2008;
e. The weighted average number of S&B shares in issue is 126 995 022
before and after the acquisition;
f. The diluted weighted average number of S&B shares in issue is 135
970 022 before and after the acquisition;
g. Interest foregone on the cash utilised by S&B to fund the
acquisition at a pre-tax rate of 9% per annum was taken into account.
3. Net asset value and net tangible asset value per share in the "After
the acquisition" column have been based on the following assumptions:
a. The balance sheet of Civil & Coastal used in the preparation of the
pro forma financial effects was extracted from their audited financial
statements as at 28 February 2007;
b. The balance sheet of S&B used in the preparation of the pro forma
financial effects as at 28 February 2007 was extracted from the pro forma
results published in the prospectus;
c. The total number of S&B shares in issue is 139 380 867 before and
after the acquisition;
d. The total diluted number of S&B shares in issue is 148 355 867
before and after the acquisition.
Johannesburg
19 September 2007
Sponsor: Bridge Capital Advisors (Pty) Limited
Attorneys: Webber Wentzel Bowens
Date: 19/09/2007 12:16:56 Produced by the JSE SENS Department.
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