| Mon 30 Jun 2008, 13:59 | | EXL - Excellerate Holdings Limited - Acquisition and cautionary announcement |
|
EXL
EXL
EXL - Excellerate Holdings Limited - Acquisition and cautionary announcement
EXCELLERATE HOLDINGS LIMITED
(Registration number 1997/009884/06)
JSE Code: EXL ISIN: ZAE000026092
(Incorporated in the Republic of South Africa)
("Excellerate" or "the Group")
ACQUISITION AND CAUTIONARY ANNOUNCEMENT
1. Introduction
Further to the cautionary announcements dated 11 April 2008 and 27 May 2008,
shareholders are advised that Excellerate has entered into a transaction with
the Venter Familie Trust ("the seller") pursuant to which Excellerate will
acquire the following from the seller:
37,4% of the issued share capital in Vital Distribution Solutions (Proprietary)
Limited ("Vital Distribution");
50% of the issued share capital in Staffing Logistics (Proprietary) Limited
("Staffing Logistics"); and
50% of the issued share capital in Vital Fleet (Proprietary) Limited ("Vital
Fleet"),
(collectively "the transaction").
The sale of shares agreements ("the agreements") relating to each of the above
entities have been entered into simultaneously and all of the agreements must
become unconditional in order for the transaction to become effective.
2 Background
Vital Distribution and Vital Fleet ("Vital") focus on distribution and
warehousing. The business was originally established in 1998 by Piet Venter and
Mark Uren to provide an all encompassing trans-shipment, warehousing and
transport service within South Africa.
Vital has developed a strong reputation for providing reliable and cost
effective distribution and warehousing services to its broad range of clients.
The company`s distribution management systems are of exceptionally high standard
and are continuously subject to enhancement and improvement. The company prides
itself on its integrity driven partnerships and customised solutions that are
aimed at satisfying specific customer needs.
Mark Uren has entered into service agreements with Vital Distribution and Vital
Fleet in terms of which his services will be procured by these entities for not
less than 3 years.
Staffing Logistics was established in 1999 and provides professional and cost
effective labour solutions to select clients, enabling the client to focus on
their core business. Cynthia Uren, a founding member of Staffing Logistics, has
entered into a service agreement with Staffing Logistics in terms of which her
services will be procured for not less than 3 years.
Piet Venter is a founding member and director of Vital and Staffing Logistics
and will tender his resignation from both Vital and Staffing Logistics upon the
implementation of the transaction.
3 Rationale for the transaction
Excellerate is listed on the Consumer Services Sector of the Main Board of the
JSE Limited ("JSE") and is focused on Consumer Services, Trading and
Distribution and Light Manufacturing.
The strategy of Excellerate is to aggressively grow its core businesses both
organically and through acquisitions. It is anticipated that this transaction
will offer further opportunities and synergistic benefits to the existing
trading and distribution businesses within the Group.
It is further expected that the addition of Staffing Logistics will result in
additional synergies accruing within the Group`s consumer services business
units.
4 Suspensive conditions
The transaction is subject to the fulfillment of the following suspensive
conditions:
* by no later than 31 July 2008, approval of the transaction by the
Competition Commission in terms of the Competition Act 89 of 1998);
* by no later than 31 July 2008, approval of the transaction by the
shareholders of Excellerate in general meeting; and
* by no later than 8 July 2008, notification by Excellerate to the seller
that a satisfactory due diligence review has been completed, after receipt
by Excellerate of the effective date accounts.
The dates above may be extended if appropriate at Excellerate`s discretion.
In accordance with the Companies Act 61 of 1973, as well as the Listings
Requirements of the JSE ("Listings Requirements"), Vital and Staffing Logistics
would, following this transaction, be considered subsidiaries of Excellerate and
accordingly, the articles of association of these entities would require
amendment to conform to Schedule 10 of the Listings Requirements.
5 Purchase consideration
The aggregate maximum purchase consideration payable by Excellerate to the
seller is R80,190,342 ("the purchase consideration").
The purchase consideration will be payable in cash in four tranches, and will be
calculated by way of formulae linked to profit after tax per annum attained by
Vital Distribution, Vital Fleet and Staffing Logistics for the year ended 28
February 2008 and over the subsequent three years.
6 Warranties
The transaction is subject to the usual warranties and indemnities associated
with a transaction of this nature.
7 Effective Date
The effective date of the transaction is 1 March 2008, subject to the successful
fulfillment and / or waiver of the suspensive conditions.
8 Financial effects
The unaudited pro forma financial effects as set out below have been prepared
for illustrative purposes only to assist shareholders in assessing the impact of
the transaction on earnings per share ("EPS"), headline earnings per share
("HEPS"), net asset value per share ("NAVPS") and tangible net asset value per
share ("TNAVPS") of Excellerate for the six months ended 31 December 2007, had
the transaction occurred on 1 July 2007 for income statement purposes and on 31
December 2007 for balance sheet purposes.
The unaudited pro forma financial effects have been prepared using accounting
policies that comply with IFRS and that are consistent with those applied in the
audited results of Excellerate for the twelve months ended 30 June 2007.
These unaudited pro forma financial effects have been disclosed in terms of the
Listings Requirements and, because of their nature, may not fairly present
Excellerate`s financial position, changes in equity, results of operations or
cash flows.
The unaudited pro forma financial effects are the responsibility of the
directors of Excellerate.
Unaudited Pro forma Change %
before after
transaction transaction
EPS (cents) 7.1 9.1 29.1
HEPS (cents) 7.1 9.2 29.4
NAVPS (cents) 77.9 77.9 0.0
TNAVPS (cents) 52.6 46.4 (11.9)
Weighted average number of 218,929 218,929
shares in issue (`000)
Shares in issue at year 219,045 219,045
end (`000)
Notes:
1 The EPS, HEPS, NAVPS and TNAVPS as set out in the "before" column of the
table, are based on Excellerate`s interim financial results for the six
months ended 31 December 2007.
2 EPS and HEPS effects are based on the following assumptions and
information:
A except to the extent that surplus cash would have been available within the
Excellerate Group, the purchase consideration of R80,190,342 would have
been financed through borrowings bearing interest at prevailing interest
rates;
B costs incurred for this transaction are estimated at R1,975,000;
C the total profit attributable to the 37,4% interest in Vital Distribution,
the 50% interest in Vital Fleet and the 50% interest in Staffing Logistics
acquired by Excellerate is based on the audited effective date accounts of
Vital Distribution, Vital Fleet and Staffing Logistics as at 29 February
2008; and
D The results of the transaction have been included on a proportional
consolidation basis.
9 Cautionary announcement
Shareholders are advised they no longer need to exercise caution as a result of
this transaction.
However, shareholders are further advised that Excellerate has entered into
negotiations with a view to possibly concluding a further acquisition by
Excellerate which may, if successfully concluded, have an effect on the price at
which Excellerate`s shares trade.
Excellerate shareholders are therefore advised to continue to exercise caution
when dealing in their Excellerate shares until such time as a further
announcement is made.
10 Circular to shareholders
Shareholders are advised that the transaction constitutes a Category 1
transaction in terms of the Listings Requirements and accordingly, is subject to
the approval of shareholders in general meeting.
A circular, containing full details of the transaction, will be posted to
shareholders in due course and will incorporate a notice of general meeting to
be held for purposes of obtaining approval by shareholders.
Johannesburg
30 June 2008
Sponsor Reporting accountants` Attorneys
BJM Corporate Finance KPMG Inc. Werksmans
Date: 30/06/2008 13:59:01 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.
