| Mon 22 Sep 2008, 15:30 | | AIP - Adcock Ingram Holdings Limited - Specific repurchase of Adcock shares in |
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AIP
AIP
AIP - Adcock Ingram Holdings Limited - Specific repurchase of Adcock shares in
terms of section 85 of the Act from the Tiger Brands group and the granting of a
general authority for Adcock to repurchase its shares
Adcock Ingram Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration No. 2007/016236/06)
Share code: AIP
ISIN: ZAE000123436
("Adcock" or the "company")
Specific repurchase of Adcock shares in terms of section 85 of the Act from the
Tiger Brands group and the granting of a general authority for Adcock to
repurchase its shares
1. THE SPECIFIC REPURCHASE
1.1 Background and rationale
On 25 August 2008, Adcock was separately listed on the JSE and unbundled
from Tiger Brands. Prior to the unbundling, a subsidiary of Tiger Brands,
Tiger Consumer Brands Limited ("TCB"), held 8,589,328 Tiger Brands shares
as treasury shares. Following the unbundling, TCB holds 8,589,328 Adcock
shares corresponding to approximately 5% of Adcock`s issued share capital
("repurchase shares").
In terms of the unbundling agreement, should TCB or any other member of the
Tiger Brands group to whom the repurchase shares are transferred by TCB
pursuant to the provisions of the unbundling agreement ("the offeror") wish
to dispose of all or any part of the repurchase shares to a bona fide
independent third party (other than a member of the Tiger Brands group),
Adcock has a pre-emptive right over the repurchase shares ("pre-emptive
right"). The decision to exercise the pre-emptive right will be at the
discretion of the Adcock board of directors ("the Board").
As Tiger Brands was a material shareholder of Adcock in the last 12 months,
Tiger Brands is deemed to be a related party of Adcock, as defined by the
Listings Requirements of the JSE Limited ("JSE") ("Listings Requirements").
1.2 Pre-emptive right terms and pricing
The offer of all or any of the repurchase shares ("sale shares") by the
offeror to Adcock (or its nominee reasonably acceptable to Tiger Brands)
("offeree") in terms of the pre-emptive right (the "offer") will be open
for acceptance by the offeree for a period of five business days following
the receipt of the offer by the offeree. The offer will stipulate a price
at which the offeror wishes to sell the sale shares (the "offer price").
Should the offeree not accept the offer, then the offeror is entitled,
within 90 days after such non-acceptance, to sell and transfer all the sale
shares to a bona fide independent third party or through the mechanism of
the JSE or by means of a bookbuild process, provided that such sale is
concluded:
- at a price not less than 90% in respect of a sale to a bona fide
third party/ies;
- at a price not less than 90% in respect of sales on the JSE;
- at a price not less than 85% in respect of a bookbuild;
of the offer price and in all cases on such other terms and conditions not
materially more favourable than those of the offer.
To the extent the offeror does not sell all the sale shares within a period
of 90 days after the non-acceptance referred to above, Adcock will retain a
pre-emptive right over the sale shares not sold.
1.3 Conditions precedent
The grant of the pre-emptive right is subject to:
- the approval of the board of Tiger Brands (which approval has been
granted prior to the unbundling); and
- within 50 days of the unbundling, the approval of the Adcock
shareholders of the repurchase of its own shares in accordance with
the Companies Act, 1973 (Act 61 of 1973), as amended, and the
Listings Requirements.
The specific repurchase is therefore conditional on the passing and
registration of an appropriate special resolution at a general meeting of
Adcock shareholders, which it is proposed will be held on Wednesday, 15
October 2008, granting the Board the authority to exercise the pre-emptive
right. Such authority will provide that if the price per Adcock share at
which the specific repurchase is effected ("the purchase price") is at a
premium to the weighted average traded price of an Adcock share measured
over the 30 business days prior to the date that the purchase is agreed to
in writing between Tiger Brands and Adcock, then the Board shall only
exercise the pre-emptive right if, prior to the specific repurchase being
effected, Adcock obtains an opinion or provides a written confirmation as
contemplated in 10.4(f) or 10.7(b), as the case may be, of the Listings
Requirements, stating that the specific repurchase is fair insofar as the
Adcock shareholders are concerned.
1.4 Financial effects
The pro forma financial effects set out in this paragraph have been
prepared to assist Adcock shareholders to assess the impact of the specific
repurchase on the earnings per Adcock share, headline earnings per Adcock
share, NAV per Adcock share and TNAV per Adcock share and are based on the
adjusted reviewed results for the six months ended 31 March 2008. The
calculation of the pro forma financial effects assumes a price per Adcock
share of 3580 cents, being the closing market price per Adcock share on 1
September 2008 and assumes that TCB`s entire holding of 8,589,328 Adcock
shares has been repurchased from available cash resources. Due to their
nature, the pro forma financial effects may not fairly present Adcock`s
financial position, changes in equity and results of operations or cash
flows.
The pro forma financial effects are the responsibility of the Board and
have been prepared for illustrative purposes only.
Per Adcock share Before N1 Change After Change
(cents) (cents) (cents) (%)
Earnings per share 171.0 1.6 N2 172.6 1.0
Headline earnings per share 173.3 1.8 175.1 1.0
Diluted earnings per share 169.2 1.5 N3 170.7 0.9
Diluted headline earnings 171.4 1.7 N3 173.1 1.0
per share
Net asset value per share 750.1 (155.2) N4 594.9 (20.7)
(cents)
Tangible net asset value 619.7 (162.0) 457.6 (26.1)
per share (cents)
Number of shares (millions) 172.9 (8.6) 164.3
Notes
N1 Source: The "before" start point relates to the reviewed March
numbers adjusted for certain statutory entities which were not
unbundled and which remained with the Tiger Brands group. This is
consistent with the pre-listing statement dated 29 July 2008. The
number of Adcock shares has been adjusted to accurately reflect
the number of Adcock shares in issue (172.9m), at the last date to
register for the unbundling.
N2 The change in the earnings is as a result of the pro forma entries
relating to (1) the accounting and legal costs of the share re-
purchase of R0.11 million, which is a non-continuing adjustment
and (2) the reduction of interest earned of R11.9 million on cash
balances (using an interest rate of 10.75%) as a result of the
cash-outflow of R307.5 million in relation to the share
repurchase, which is a continuing adjustment.
N3 The dilutive effect is as a result of 3 million share options that
are exercisable. The dilution has been calculated using an average
strike price of R13.75 (trade price of R35.80).
N4 The reduction in net asset value per share relates to the impact
on the earnings as detailed in N2 and the cash outflow of R307.5
million from the share repurchase. The R307.5 million share
repurchase has been calculated using a share price of R35.80 per
Adcock share.
2. THE GENERAL REPURCHASE
The Board considers it prudent to request from Adcock shareholders a
limited general authority to repurchase Adcock shares under circumstances
where the Board considers the conditions to be favourable to the company.
The notice in respect of the general meeting referred to above will contain
a further resolution in this regard, which will be subject to the Listings
Requirements.
3. SALIENT DATES AND TIMES ARE:
2008
Circular posted to Adcock shareholders on Monday, 22 September
Forms of proxy to be lodged by no later than Monday, 13 October
09:00 on
General meeting to be held at 09:00 on Wednesday, 15 October
Results of the general meeting released on SENS Wednesday, 15 October
on
Results of the general meeting published in the Thursday, 16 October
press on
Special resolutions lodged for registration on Friday, 17 October
or about
Johannesburg
22 September 2008
Sponsor to Adcock
Deutsche Securities (SA) (Proprietary) Limited
Attorneys to Adcock
Read Hope Phillips
Transfer Secretaries to Adcock
Computershare
Reporting Accountants and Auditors to Adcock
Ernst & Young
Date: 22/09/2008 15:30:01 Produced by the JSE SENS Department.
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