| Wed 26 Nov 2008, 14:27 | | ELI - Ellies Holdings Limited - Acquisition And Cautionary Announcement |
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ELI
ELI
ELI - Ellies Holdings Limited - Acquisition And Cautionary Announcement
Ellies Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number: 2007/007084/06)
JSE code: ELI ISIN: ZAE000103081
("Ellies")
ACQUISITION OF THE BUSINESS CONDUCTED BY CONSOLIDATED ASSOCIATED TECHNOLOGY CC
("CAT") ("THE CAT BUSINESS") AND CAUTIONARY ANNOUNCEMENT
Ellies, through its wholly-owned subsidiary Ellies (Proprietary) Limited ("the
purchaser"), has concluded an agreement to acquire the CAT business as a going
concern ("the acquisition").
With a long history in electronic security integration, CAT is a leading
technical systems integrator, focusing nationally on the design and deployment
of electronic security solutions including fibre network infrastructure and
software solutions such as CCTV and access control. The CAT business offers full
technical and on-site support, system maintenance and monitoring and after-hours
managed support and assistance.
RATIONALE FOR THE ACQUISITION
Ellies` management believes that the CAT business will fulfil a strategic
service and product supply role by adding its product range and skills to the
group`s existing offerings. The CAT business contribution will significantly
enhance the group`s services to its existing corporate customers and a total
packaged offering to the group`s new customers.
CAT has obtained the national distributorship for Panasonic CCVE equipment
(CCTV) and Panasonic IRIS Readers (access control). In addition CAT also holds
the national distributorship for XR Plus which products include the South
African bank-approved CCTV and digital recorders.
The demand for improved security measures and solutions necessitated the need to
expand Ellies` current security offerings to include additional options provided
by the CAT business such as CCTV.
TERMS AND CONDITIONS OF THE ACQUISITION
CAT has sold to the purchaser with effect from 1 January 2009 ("the effective
date") the CAT business comprising all the assets used in connection with the
CAT business on the effective date and certain stipulated liabilities.
The acquisition is conditional upon the fulfilment of certain conditions
including inter alia -
- the satisfactory outcome of a due diligence investigation to be conducted
by the purchaser;
- written approval of the Ellies board.
Subject to the achievement, or not, of certain profit warranties -
- the maximum purchase consideration payable to CAT is R18,000,000, which
shall be settled by the payment in cash of a maximum of R9,000,000 and the
balance by the issue of ordinary shares in Ellies at the volume weighted average
traded price of an Ellies share on the JSE for the 30 business day period
immediately prior to the determination by the purchaser`s auditors of any
additional purchase consideration payable to CAT in the relevant financial year;
- the minimum purchase consideration payable to CAT is R4,812,500, which
shall be settled by the payment in cash of R2,750,000 and the balance by the
issue of 1 375 000 Ellies shares at an issue price of R1,50 per Ellies share on
the implementation date of the acquisition.
PROFIT WARRANTIES AND ADJUSTMENTS TO THE PURCHASE PRICE
The minimum purchase consideration paid as detailed above may be increased by a
maximum aggregate amount of R13,187,500 depending on the achievement by the CAT
business of a stipulated net profit after tax for each of the 12 month periods
ending upon each of the commencement of 1 January 2009, 2010 and 2011.
FINANCIAL EFFECTS OF THE ACQUISITION
The financial effects of the acquisition will be published in due course.
CAUTIONARY
Ellies shareholders are advised to exercise caution when trading in Ellies
shares until the publication of a further announcement.
CATEGORISATION OF THE ACQUISITION
The acquisition of the CAT business is a category 2 transaction in terms of
section 9.5(a) of the Listings Requirements of the JSE Limited.
Johannesburg
26 November 2008
Designated Advisor
Java Capital (Proprietary) Limited
Date: 26/11/2008 14:27:02 Produced by the JSE SENS Department.
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