| Fri 11 Jan 2008, 14:24 | | DLG - Dialogue Group Holdings - Acquisition By Dialogue Of Verge Management |
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DLG
DLG
DLG - Dialogue Group Holdings - Acquisition By Dialogue Of Verge Management
Services (Pty) Limited ("Verge")
Dialogue Group Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 2005/039219/06)
Share code: DLG & ISIN: ZAE000083820
("Dialogue" or "the group")
ACQUISITION BY DIALOGUE OF VERGE MANAGEMENT SERVICES (PTY) LIMITED ("VERGE")
1. Introduction
Bridge Capital is authorised to announce that Dialogue has entered into an
agreement dated 9 January 2007 to acquire the entire issued share capital of
Verge from Simeka Group (Pty) Limited and Glenda White ("the vendors"), ("the
acquisition").
2. Rationale for the acquisition
The acquisition is in line with Dialogue`s expansion strategy and is a strategic
move towards penetrating and rapidly expanding its services into the public
sector market. Dialogue and Verge have common areas of delivery in various
parts of their businesses and this acquisition is expected to present
opportunities to extract synergies through costs savings, business development
and common infrastructure.
3. Overview of the acquisition
3.1 Verge
Verge provides consultancy and business process outsourcing services to the
public sector. It has interests in various outsourcing contracts, a 50%
interest in Sibize International (Pty) Limited ("Sibize") and a 50% interest in
Siyandza Skills Development (Pty) Limited ("Siyandza"). The acquisition of
Verge includes its 50% shareholding in Sibize and various outsourcing contracts
but excludes Verge`s shareholding in Siyandza. Dialogue currently owns 50% of
Sibize and post the acquisition, the group will own the entire issued share
capital of Sibize.
3.2 Details of the acquisition
3.2.1 Acquisition consideration
The acquisition consideration is payable upon the fulfilment of the
conditions precedent set out in paragraph 3.2.2 below. Dialogue will
pay an initial amount of R47.5 million for Verge`s interest in Sibize
in the form of cash and shares at the election of the vendors to be
settled within three business days of the effective date. The cash
component of the initial amount may not exceed 50% of the initial
amount. The number of shares will be based on the volume weighted
average share price for the 30 days preceding 20 November 2007.
The remaining consideration relating to various outsourcing contracts
will be determined after the release of the audited financial
statements for Dialogue (31 December 2007) and Verge (29 February
2008) in accordance with predetermined terms and adjustments whereby
the parties may mutually agree to retain specific outsourcing related
contracts in Verge. This will be settled through an issue of new
Dialogue shares and the vendors will have an option of electing to
receive a cash payment of up to 25% of the remaining consideration.
The number of shares to be issued as part of the remaining
consideration will be based on the volume weighted average share price
for the 30 days preceding 30 April 2008.
3.2.2 Conditions precedent
The acquisition is subject to, inter alia, the fulfilment of the
following conditions precedent:
- the conclusion of restraint agreements with Glenda White, Nkateko
Sibiya and other key personnel;
- all statutory and regulatory approvals including but not limited to
the JSE Limited, the Securities Regulation Panel, South African
Reserve Bank and the Competition Commission, to the extent required;
- an undertaking by the Vendors that the supplier agreement between
Verge and Sibize will remain in place irrespective of the change in
ownership of Verge;
- confirmation and agreement of terms with suppliers; and
- approval of the acquisition by Dialogue shareholders in a general
meeting.
4. Effective date
The effective date of the acquisition will be the first day of the month
following the month in which the last remaining condition precedent is
fulfilled.
5. Articles of association
Pursuant to the acquisition, Verge will become a subsidiary of Dialogue. In
accordance with paragraph 9.16 of the Listings Requirements of the JSE
Limited ("Listings Requirements"), the articles of association of Verge
will be amended to conform to Schedule 10 of the Listings Requirements.
6. Cautionary announcement
In compliance with paragraph 9.15 of the Listings Requirements, pro forma
financial effects must be disclosed to provide information on the impact of
the acquisition on the Dialogue reported financial statements. However, as
disclosed in paragraph 3.2.1 above, the total acquisition consideration is
to be determined at a future date and as such, financial effects of the
acquisition will be released once the group is satisfied that a reasonable
degree of certainty exist on the forecasts and a trading update is
released.
Accordingly, shareholders are advised to exercise caution when dealing with
the company shares until such a time that the financial effects of the
acquisition are released.
7. Circular
In terms of the Listings Requirements, the acquisition is classified as a
Category 1 transaction. A circular to shareholders setting out full details
of the acquisition and incorporating a notice convening a general meeting
to consider and, if deemed appropriate, to approve the transaction will be
circulated to shareholders within 28 days following approval by the
Competition Commission.
Cape Town
11 January 2008
Corporate Advisor and Designated Advisor: Bridge Capital Advisors (Pty) Limited
Date: 11/01/2008 14:24:03 Produced by the JSE SENS Department.
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