| Tue 24 Jun 2008, 17:05 | | CBH - Country Bird Holdings - Announcement To Shareholders Of CBH Regarding |
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CBH
CBH
CBH - Country Bird Holdings - Announcement To Shareholders Of CBH Regarding
The Acquisition
COUNTRY BIRD Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 2005/008505/06)
Share Code: CBH & ISIN: ZAE000094835
("CBH")
ANNOUNCEMENT TO SHAREHOLDERS OF CBH REGARDING THE ACQUISITION OF THE OTHER
50% OF THE ISSUED SHARES OF HOLLYBERRY PROPS 40 (PROPRIETARY) LIMITED AND
NUTIRI FEEDS (PROPRIETARY) LIMITED (COLLECTIVELY "NUTRI FEEDS") BY CBH FROM
FOURIE`S POULTRY FARMS (PROPRIETARY) ("CHUBBY CHICKS")
1. Introduction
Investec Corporate Finance is authorised to announce that on 23 June 2008
CBH, entered into an agreement with Chubby Chicks to acquire 50% of the
issued shares of Nutri Feeds ("acquisition") for a cash consideration of
R106.65 million ("purchase consideration") to increase its holding to 100%.
The Nutri Feeds shares are being acquired cum dividend.
2. Nutri Feeds business
Nutri Feeds is a manufacturer of feed for a wide range of animal species with
feed mills in Viljoenskroon, Bloemfontein and Mafikeng. The company services
South Africa, Namibia, Botswana, Lesotho and Swaziland.
3. Rationale for the acquisition
The acquisition provides CBH with the ability to fully control its South
African poultry feed requirements
4. Salient terms of the acquisition
4.1 Effective date
The effective date of the transaction will be 1 July 2008 ("effective
date").
4.2 Purchase consideration
CBH will acquire the 50% of Nutrifeeds from Chubby Chicks for a cash
consideration of R106.65 million. The purchase consideration will be
settled in cash by using the cash and debt resources of the group.
4.2.1 Deferred purchase consideration
It has been further agreed that Chubby Chicks will share equally in the
upside or downside as a result of any forward raw material purchase
contracts still open at the effective date. The adjustment will be
calculated from the effective date to date of fulfilment of each of the
relevant forward purchase contracts, or date on which the rights in such
forward contract are transferred to a third party. The portion
attributable to Chubby Chicks will be disbursed in terms of either a
discount or premium on feed deliveries to Chubby Chicks during the
period from the effective date to 30 September 2008.
4.2.2 Settlement of the purchase consideration
The purchase consideration will be settled upon the fulfilment of the
suspensive condition set out in 4.3 below. Interest on the purchase
consideration will accrue at the prime lending rate from 1 July 2008 to
the date of payment.
4.3 Suspensive condition
The acquisition is subject to the approval of the Competition authorities.
4.4 Warranties and indemnities
Warranties and indemnities normal in transactions of this nature have been
provided to CBH by Chubby Chicks.
5. Financial effects on CBH shareholders
The unaudited pro forma financial effects of the acquisition are the
responsibility of the directors of CBH and are presented for illustrative
purposes only to provide information about how the acquisition might have
impacted on the financial position and results of CBH had the acquisition
occurred at an earlier date.
These pro forma financial effects are based on CBH`s published interim
results for the period ended 31 December 2007 adjusted for the additional
50% of Nutri Feeds
Before (cents) After (cents) Percentage
(1,3) (2,4,5,6,7) change
Per CBH share
Earnings 25.92 29.00 11.9%
Headline earnings 26.00 29.08 11.9%
Diluted earnings 25.71 28.77 11.9%
Diluted headline earnings 25.78 28.84 11.9%
Net asset value 152.85 152.85 0%
Tangible net asset value 144.53 111.75 -22.7%
Weighted average number of 187,099 187,099 0%
shares (`000)
Diluted weighted average 188,641 188,641 0%
number of shares (`000)
Notes:
1. The earnings, headline earnings, diluted earnings, and diluted headline
earnings per share, as set out in the Before column, are based on the
published interim results of CBH for the period ended 31 December 2007.
2. The earnings, headline earnings, diluted earnings, and diluted headline
earnings per share, as set out in the After column, are based on the
interim results of CBH for the period ended 31 December 2007 with an
increased shareholding in Nutri Feeds at 100% from 50%. Interest on the
portion of the purchase consideration funded by debt has been taken into
account for the six months.
3. The net asset value and tangible net asset value per share, as set out
in the Before column, are based on the latest published financial
information of CBH, being the interim balance sheet as at 31 December
2007.
4. The net asset value and tangible net asset value per share, as set out
in the After column, is based on the latest published interim balance
sheet of CBH as at 31 December 2007 and the increased holding of Nutri
Feeds assets and liabilities at 100% increased from the previous 50%
inclusion due to accounting of assets and liabilities under common
control. This was calculated on the assumption that the purchase
consideration is fully funded by debt.
5. It is assumed that the acquisition became effective at the beginning of
the six month period for income statement purposes and on the last day
of the period for balance sheet purposes.
6. An interest rate of prime less 1% was assumed for the debt used to
settle the purchase consideration.
7. For this calculation, the purchase consideration has been considered in
terms of the requirements of IFRS 3. Based on management`s best estimate
at this stage, the excess of the cash payment to Chubby Chicks over the
acquired portion of the net asset value of R46 million has been
allocated to Goodwill. The allocation of the purchase consideration to
tangible and intangible assets, liabilities and goodwill is a process
requiring a detailed identification and valuation exercise. This will be
completed once the acquisition is finalised, if this results in the
allocation being materially different to management`s estimates,
shareholders will be advised thereof.
6. Categorisation
This is a category two transaction per the categorisation rules contained in
the JSE Listing Requirements.
Sandton
24 June 2008
Investment Bank and Sponsor to CBH
Investec Corporate Finance
Date: 24/06/2008 17:05:01 Produced by the JSE SENS Department.
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