| Wed 12 Dec 2007, 8:30 | | ELI - Ellies - Acquisition of the business conducted by Reeflite(Pty) Ltd |
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ELI
ELI
ELI - Ellies - Acquisition of the business conducted by Reeflite(Pty) Ltd
("Reeflite") ("The Reeflite Business")
Ellies Holdings Limited
(formerly Everlight Investments (Pty) Ltd)
(Incorporated in the Republic of South Africa)
(Registration number: 2007/007084/06)
JSE code: ELI & ISIN: ZAE000103081
("Ellies"")
ACQUISITION OF THE BUSINESS CONDUCTED BY REEFLITE(PTY) LTD ("REEFLITE")
("THE REEFLITE BUSINESS")
Further to the announcement on 14 November 2007 and the renewal of
cautionary contained in the further announcement on 4 December 2007,
shareholders of Ellies are advised that Ellies has concluded an agreement to
acquire, through its wholly owned subsidiary Ellies (Proprietary) Limited,
with effect from 1 May 2008 and subject to certain suspensive conditions,
the Reeflite business("the acquisition") from Reeflite.
The Reeflite business
The Reeflite business was established in 1995 and manufactures, imports and
distributes a range of industrial lighting luminaries.
The company`s head office is in Chamdor, Krugersdorp with branches in Cape
Town and KwaZulu Natal and has 106 employees.
The Reeflite business offers a range of products including, amongst others,
locally manufactured white GRP (glassfibre) floodlights and indoor fittings
(such as low bays and high bays used for factory lighting) and imported
fluorescent fittings and die cast aluminium floodlights.
All fittings imported from China are equipped with control gear in the
Reeflite factory. Control gear for other fittings are imported from Europe.
As an additional service to certain of Reeflite`s customers, a range of
fluorescent channels are supplied.
The Reeflite business supplies products to most electrical wholesalers in
South Africa, Namibia, Swaziland, Zambia, the Democratic Republic of Congo
and Malawi, electrical contractors, end users and electrical independent
consultants.
A large portion of Reeflite`s lights are manufactured locally which is in
line with Ellies` philosophy of promoting South African-made products
thereby facilitating job creation and contributing to business growth in
South Africa.
Rationale for the acquisition
There are synergies arising from integration of Reeflite`s products and
customer base with the Ellies range of products and customer base. The
acquisition will allow the range of Reeflite products to be sold to
retailers and integrated into the Ellies Corporate Division`s offering which
services businesses, townhouse complexes and cluster developments.
The acquisition will enable Ellies to grow its customer base by supplying
its domestic electrical products to Reeflite`s wholesale customers,
currently an unexplored market for Ellies. Reeflite`s lighting products will
now also be available at all Ellies branches in Southern Africa. Ellies`
offering of engineering and powder-coating facilities should also streamline
efficiencies in the Reeflite business` costing structure.
Terms of the acquisition
Reeflite has sold to Ellies with effect from 1 May 2008 (the "effective
date") the Reeflite business comprising all the assets used in connection
with the Reeflite business on the effective date and certain stipulated
liabilities.
The acquisition is conditional upon the fulfilment of certain conditions,
including, inter alia,
- the satisfactory outcome of a due diligence investigation to be
conducted by Ellies;
- the receipt of any approvals for the conclusion or implementation of
the acquisition required in terms of any applicable law, statute or
regulation (including in terms of the Competition Act No 89 of 1998 and
the JSE Listings Requirements);
- written approval of the board.
Subject to the over-achievement, of certain profit warranties, set out
below, the maximum purchase consideration is R38 381 150 which shall be
settled by the issue to Reeflite of a maximum of 5 550 575 ordinary shares
in Ellies and the payment in cash to Reeflite of a maximum of R27 280 000.
Profit warranties and adjustment to the purchase price
R21 331 150 of the purchase consideration (being the difference between the
purchase consideration payable on achieving the profit warranty and the
minimum purchase consideration payable) is subject to the achievement by the
Reeflite business of a stipulated net profit after tax for the 12 months
from the effective date, failing the achievement of which, certain of the
consideration shares conditionally allotted and issued will revert back to
Ellies and the purchase consideration reduced accordingly.
The minimum purchase consideration payable is R10 230 000, which shall be
settled by the issue to Reeflite of 1 278 750 ordinary shares in Ellies and
the payment in cash to Reeflite of R7 672 500.
Financial effects and renewal of cautionary
The financial effects of the acquisition will be published in due course.
Ellies shareholders are advised to continue to exercise caution when trading
in Ellies shares until the publication of a further announcement.
Johannesburg
12 December 2007
Designated Advisor
Java Capital (Proprietary) Limited
Date: 12/12/2007 08:30:01 Produced by the JSE SENS Department.
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