| Tue 4 Dec 2007, 8:00 | | SAN - Sanyati Holdings - Acquisition Of Meyker Group And Withdrawal Of |
|
SAN
SAN
SAN - Sanyati Holdings - Acquisition Of Meyker Group And Withdrawal Of
Cautionary Announcement
SANYATI HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration number: 1988/002538/06)
(JSE code: SAN ISIN: ZAE000081055)
("Sanyati" or "the company")
ACQUISITION OF MEYKER GROUP AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1 INTRODUCTION
Shareholders are referred to the cautionary announcements dated 10 October 2007
and 21 November 2007.
Sanyati has, subject to the conditions precedent set out below, purchased all
the issued shares in and claims on loan account against Meyker Construction
(Pty) Limited and Meyker Re Teng Construction (Pty) Limited ("the Meyker Group")
from African Spirit Trading 78 (Pty) Limited, J Gutter Trust, De Bruin
Konstruksie Trust, D & L Trust, Bosch Trust and Meyker Konstruksie Trust ("the
vendors") ("the acquisition").
2 RATIONALE FOR ACQUISITION
Sanyati is a black empowered civil engineering and construction company
operating mainly in KwaZulu-Natal and the Northern Provinces. The company
executes projects for a number of private clients, parastatals and government
departments. Large infrastructure projects are tendered for and undertaken by
Sanyati as main contractor and/or in partnership with larger private or listed
construction companies. The Meyker Group is a civil engineering company that
serves the civil engineering and construction market in the Free State, Northern
Cape and Northern Provinces.
The acquisition will achieve Sanyati`s long-term objective of regional expansion
outside its traditional areas of operation. The Meyker Group`s customer base of
corporate clients and local government will enhance Sanyati`s customer profile.
The Meyker Group`s long term relationship with telecommunication companies has
resulted in ongoing projects to expand the fibre-optic networks.
3 DESCRIPTION OF MEYKER`S BUSINESS
The Meyker Group is a civil engineering company specialising in the provision of
ground works, earth moving, mobile crushing, sealing, road construction, the
building of dams and laying of optical fibre cables for Transtel, MTN and
Vodacom. The Meyker Group distinguishes itself from other competitors through
its expertise and specialised equipment in the supply and maintenance of masts
and stay foundations in South Africa for the telecommunications industry.
The Meyker Group`s clients include the Free State and Northern Cape provincial
government, Transtel, Eskom, Vodacom and MTN.
4 TERMS AND CONDITIONS OF THE ACQUISITION
4.1 On 3 December 2007 Sanyati entered into an agreement, subject to the
fulfilment of the conditions precedent in 5 below, to purchase, with effect
from 1 October 2007, all the issued share capital in and claims on loan
account against the Meyker Group. The purchase consideration is a maximum
of R 220 million and is subject to adjustment should certain profits not be
achieved plus a maximum additional payment of R 30m if exceptional pprofits
are achieved in 2010.
4.2 The purchase price is payable as follows:
4.2.1 Initial Payment
An amount equal to the lesser of the net tangible asset value of the Meyker
Group as at 1 October 2007 or R30 million on the acquisition becoming
unconditional, payable in cash.
4.2.2 Second Additional Payment
The second payment will be determined as 40% of the actual net profit after tax
of the Meyker Group for the year ending 29 February 2008 multiplied by a PE
ratio of 7 and deducting from this amount the initial payment per 4.2.1.
The second payment will be paid as follows:
- 75% by the issue of Sanyati ordinary shares at an issue price of 323 cents
per share;
- 25% in cash.
4.2.3 Third Additional Payment
The third payment will be determined as 30% of the actual net profit after tax
of the Meyker Group for the year ending 28 February 2009 multiplied by a PE
ratio of 6.
The third payment will be paid as follows:
- 75% by the issue of Sanyati ordinary shares at an issue price of 323 cents
per share;
- 25% in cash.
4.2.4 Fourth Additional Payment
The fourth payment will be determined as 30% of the actual net profit after tax
of the Meyker Group for the year ending 28 February 2010 multiplied by a PE
ratio of 5.
The fourth payment will be paid as follows:
* 75% by the issue of Sanyati ordinary shares at an issue price of 323 cents
per share;
* 25% in cash.
Subject to a maximum amount of R 220 million payable for payments detailed in
4.2.1, 4..2.2, 4.2.3, and 4.2.4
4.2.5 Final Additional Payment
The final payment will be determined in an amount equal to the actual net profit
after tax of the Meyker Group for the year ending 28 February 2010, less R50
million, multiplying the result by a PE ratio of 5 and dividing the resultant
amount by one half, which final payment is payable in cash. Subject to a maximum
payment of R 30 million.
4.3 J Gutter, D Lourens, L de Bruin, L Potgieter, and A Ross, the management of
the Meyker Group have signed service and restraint agreements with the
Meyker Group. All the vendors, M O P Molema and M M Khomo have signed
restraint undertakings in favour of the Meyker Group and Sanyati.
5 CONDITIONS PRECEDENT TO THE ACQUISITION
The acquisition is subject to the fulfilment of the following conditions
precedent:
5.1 Sanyati is satisfied with the results of a due diligence investigation on
the Meyker Group; and
5.2 Approval from the Competition Authorities is obtained.
6. UNAUDITED PRO FORMA FINANCIAL EFFECTS OF THE ACQUISITION
The unaudited pro forma financial effects set out below are provided for
illustrative purposes only to provide information about how the acquisition may
have impacted on Sanyati`s results and financial position. Due to the nature of
the unaudited pro forma financial information, it may not give a fair
presentation of the company`s results and financial position after the
acquisition. The unaudited pro forma financial effects are based on the reviewed
interim financial information of Sanyati at 31 August 2007. The directors of
Sanyati are responsible for the preparation of the unaudited pro forma financial
effects.
Before the Pro forma After Change
acquisition the acquisition
reviewed interim unaudited
31 August 2007 31 August 2007
Earnings per share (cents) 8.74 12.69 45%
Headline earnings per share 8.74 12.69 45%
(cents)
Net asset value per share 98.6 134.30 36%
(cents)
Net tangible asset value 12.7 (19.84) (257%)
per share (cents)
Weighted average shares in 261 469 261 469
issue (`000)
Shares in issue at period 295 884 295 884
end (`000)
Notes:
(1) The unaudited pro forma financial effects on the results were prepared on
the basis that the acquisition was completed on 1 March 2007.
(2) The "Before the acquisition" column has been extracted without adjustment,
from the reviewed interim results of Sanyati for the six months ended 31
August 2007.
(3) The "After the acquisition" earnings and headline earnings per share have
been based on 50% of the Meyker Group`s audited results for the year ending
30 September 2007 and R 30 m in debt to fund the acquisition, accumulating
interest at 12.5% per annum.
(4) The "After the acquisition" net asset value and net tangible asset value
per share have been adjusted to include the assets of the Meyker Group and
the estimated transaction costs have been written off against share
premium. It was assumed that profit targets for September 2008 and
September 2009 will be met, resulting in a contingent consideration of
R142.5 million for the shares to be issued and a vendor liability of R77.5
million for the cash portion payable.
(5) Goodwill of approximately R201.5 million will arise on the acquisition.
7. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Caution is no longer required to be exercised by shareholders when dealing in
their securities.
8. FURTHER ANNOUNCEMENT
Shareholders will be notified once the acquisition has become unconditional.
Johannesburg
4 December 2007
Designated adviser Exchange Sponsors
Auditors PKF Chartered Accountants
Attorneys to Sanyati for Meyker Fluxmans Attorneys
Acquisition
Attorneys to vendors Prinsloo, Tindle & Andropoulos Inc
Azar & Havenga Attorneys
Competition Commission attorneys Deneys Reitz Attorneys
Date: 04/12/2007 08:00:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
