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FBR
FBR
FBR - Famous Brands - Acquisition By Famous Brands Of Cape Franchising
(Proprietary) Limited ("Cape Franchising") Master Licence Business
Famous Brands Limited
("Famous Brands" or "the company")
Share Code: FBR & ISIN: ZAE000053328
Registration number: 1969/004875/06
ACQUISITION BY FAMOUS BRANDS OF CAPE FRANCHISING (PROPRIETARY) LIMITED ("CAPE
FRANCHISING") MASTER LICENCE BUSINESS
1. INTRODUCTION
Famous Brands is pleased to announce that it has entered into an agreement
with Cape Franchising in terms of which Famous Brands will acquire from
Cape Franchising the master licence for the Western Cape franchise business
("the Cape Franchising acquisition").
The effective date of the Cape Franchising acquisition is 1 March 2008,
subject to fulfilment of the conditions precedent set out below.
The Cape Franchising acquisition is a Category 2 transaction in terms of
the JSE`s Listings Requirements.
2. THE ACQUISITION
2.1 Rationale for the Cape Franchising acquisition
Famous Brands, as part of its long term strategy going forward, took the
decision to acquire all master licence agreements to ensure that all its
franchise businesses are aligned with the current Famous Brands business
model and that the manufacture and distribution of product is optimised.
The Cape Franchising acquisition concludes the buy back of master licenses,
with Famous Brands having bought the KwaZulu-Natal master licence in
September 1997 and the Eastern Cape license in 2002. The Cape Franchising
acquisition ensures that Famous Brands gains ownership and control of all
aspects of its business.
2.2 The business of Cape Franchising
The business of Cape Franchising includes a licensing agreement for the
Steers and Debonairs Pizza brands as well as a distribution agreement which
entitled Cape Franchising to manufacture and distribute all of Famous
Brands` products within the Western Cape.
2.3 Purchase consideration
The purchase price in respect of the Cape Franchising acquisition comprises
a cash consideration of R150 million plus an additional amount in respect
of the Cape Franchising inventory (which at the date hereof is less than R4
million). The aggregate purchase price will be payable on implementation of
the Cape Franchising acquisition.
2.4 Financial effects of the acquisition
The pro forma financial effects of the Cape Franchising acquisition set out
below are the responsibility of the company`s directors and have been
prepared for illustrative purposes only, to show how the terms of the Cape
Franchising acquisition would have affected Famous Brands` results for the
six month period ended 31 August 2007 ("the interim results"). Due to their
nature, the pro forma financial effects may not fairly present the
company`s financial position, changes in equity, results of operations or
cash flows.
Before After Percentage
Change
Net tangible asset value 0.64 (0.50) (177.5)
per share ("NTAV") (cents)
Notes:
- The "Before" column reflects the NTAV as per the interim results;
- The "After" column reflects what the NTAV would have been at 31 August 2007
had the Cape Franchising acquisition taken place on 31 August 2007;
- The effect of the Cape Franchising acquisition on earnings per share,
headline earnings per share and net asset value per share is not material
and is therefore not shown.
3. CONDITIONS PRECEDENT
The implementation of the acquisition is subject to the fulfilment of the
following conditions precedent:
- the completion of a due diligence;
- approval by the Competition Commission; and
- Famous Brands obtaining the necessary funding.
Midrand
16 November 2007
Sponsor
Java Capital (Proprietary) Limited
Date: 16/11/2007 08:00:01 Produced by the JSE SENS Department.
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