| Wed 12 Mar 2008, 9:10 | | ART - Argent Industrial Limited - Acquisition |
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ART
ART
ART - Argent Industrial Limited - Acquisition
ARGENT INDUSTRIAL LIMITED
(Registration number 1993/002054/06)
Share code: ART ISIN: ZAE000019188
("Argent" or "the company")
ACQUISITION BY ARGENT OF THE ENTIRE ISSUED SHARE CAPITAL OF AND SHAREHOLDER
CLAIMS AGAINST PAINT AND LADDERS (PROPRIETARY) LIMITED ("PAINT AND LADDERS")
("THE ACQUISITION")
1. INTRODUCTION
The directors of Argent are pleased to announce that Argent has concluded an
agreement to acquire the entire issued share capital of and shareholders
claims against Paint and Ladders with effect from 1 March 2008, for a total
consideration of R57 million, to be settled by way of a cash payment of R16
286 912, and the issue of 2 525 362 Argent ordinary shares at an issue price
of R16.17 per ordinary share.
2. NATURE OF BUSINESS OF PAINT AND LADDERS
Paint and Ladders is a national company with a presence in both the paint and
ladder manufacturing industries. The company consists of two divisions,
namely the paint division with products branded as Cedar Vadek and Albestra,
and the ladder division where products are branded under the Castor and
Ladder brand. Customers include wholesalers and retailers, contractors and
construction businesses, as well as industrial companies. There are 9
branches in major centres throughout South Africa, being Bloemfontein, Cape
Town, Durban, the East Rand, Johannesburg, Klerksdorp, Port Elizabeth,
Pretoria and Richards Bay.
The two divisions have a combined turnover of over R200 million, with net
margins similar to those of the Argent Group. It is anticipated that the
acquisition will add approximately 5.5% to the headline earnings of Argent.
3. RATIONALE FOR THE ACQUISITION
The synergies of Argent and Paint and Ladders are numerous, and summarized as
follows:
- Distribution is a key aspect of the business and Argent`s distribution
infrastructure will cut costs in the business;
- Both Argent and Paint and Ladders will benefit from leveraging each
other`s branches for the presentation and sale of products;
- Argents reach into the industrial sector through the trade of steel will
promote the sale of more industrial paints;
- Xpanda and Jetmaster, who are part of the Argent Group, have well
established relationships with wholesalers and retailers and can facilitate
the sale of Paint and Ladder products in stores where they currently are not
represented;
- Castor and Ladder uses around 600 tons of aluminium per annum, which can
be supplied largely by Gammid, thus potentially increasing Gammid`s buying
power; and
- The Paint and Ladder products are well known brands and this adds more
credence to the fact that Argents diversification is well on track and will
contribute to a re-rating of the Argent share price to reflect this is.
4. TERMS OF THE ACQUISITION
The effective date of the transaction is 1 March 2008. The aggregate
purchase consideration is R57 million, which will be settled by the allotment
of 2 525 362 ordinary Argent shares of 5 cents each, to be issued at 1617
cents per share to the vendors of Paint and Ladder, and a cash portion of R16
286 912.
Application will accordingly be made to the JSE Limited, to issue a further 2
525 362 Argent ordinary shares of 5 cents each.
5. SUSPENSIVE CONDITIONS
The acquisition was subject to the approval thereof by the Competition
Commission, which approval has been granted.
6. DOCUMENTATION
The acquisition constitutes approximately 3.39% of Argent`s current issued
share capital, and is therefore not categorised by the JSE. Thus this
announcement appears for information purposes only. The transaction is at
arms length and does not require shareholder approval nor a circular to be
sent to shareholders.
Roodepoort
11 March 2008
Sponsor
ARCAY MOELA SPONSORS (PTY) LIMITED
Corporate Advisor
MANHATTAN EQUITY CORPORATE FINANCE (PTY) LIMITED
Date: 12/03/2008 09:10:55 Produced by the JSE SENS Department.
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