| Tue 23 Jun 2009, 7:40 | | REM - Remgro - Detailed Terms Announcement Relating To The Potential |
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REM
REM
REM - Remgro - Detailed Terms Announcement Relating To The Potential
Acquisition Of All The Shares In The Issued Share Capital Of Venfin Limited
Remgro Limited
(Incorporated in the Republic of South Africa)
(Registration number 1968/006415/06)
(ISIN: ZAE000026480)
(Share code: REM)
("Remgro" or "the Company")
DETAILED TERMS ANNOUNCEMENT RELATING TO THE POTENTIAL ACQUISITION OF ALL THE
SHARES IN THE ISSUED SHARE CAPITAL OF VENFIN LIMITED ("VENFIN") (EXCLUDING
VENFIN`S INTEREST IN DIMENSION DATA PLC ("DIDATA")) AND WITHDRAWAL OF
CAUTIONARY ANNOUNCEMENT
1. Introduction
Further to the cautionary announcement released by Remgro on SENS on
Monday 8 June 2009, Remgro shareholders are advised that Remgro has
submitted to the board of directors of VenFin a notice of its firm
intention to make an offer to acquire the entire issued ordinary share
capital of VenFin, on a basis that excludes VenFin`s interest in DiData
("the DiData interest") ("the offer" or "the proposed acquisition").
The purpose of this announcement is to provide Remgro shareholders with
the salient terms of the proposed acquisition. A circular which contains
the details of the proposed acquisition will be dispatched to Remgro
shareholders on or about Friday 24 July 2009. A general meeting of Remgro
shareholders ("general meeting") will be held at 11:30 on Monday 17
August 2009 at the Conference Centre, Erinvale Estate Hotel & Spa,
Lourensford Road, Somerset West to consider and, if deemed fit, pass,
inter alia, the resolutions required to authorise the implementation of
the proposed acquisition.
2. Mechanism of the proposed acquisition
Remgro is proposing to acquire, by way of a scheme of arrangement in
terms of section 311 of the Companies Act, No. 61 of 1973, as amended,
(the "Companies Act") ("the scheme"), the entire issued ordinary share
capital of VenFin, excluding the VenFin B ordinary shares ("B ordinary
shares"). Remgro will make a separate offer to the VenFin B ordinary
shareholders to acquire the B ordinary shares on the same commercial
terms and otherwise on the same basis as the offer, but with the
necessary adjustments. The acceptance of the offer in respect of the B
ordinary shares is a condition to the making of the offer and the making
of the back-up offer (as defined below), if applicable.
Should the scheme fail for any reason whatsoever, other than as a result
of any of the requisite regulatory approvals or change of control
consents not being received, Remgro will offer to acquire all the VenFin
ordinary shares by way of a general offer (the "back-up offer") on the
same terms and conditions, mutatis mutandis, as the scheme.
It is the intention of Remgro to invoke the provisions of section 440K of
the Companies Act should the proposed acquisition be implemented by way
of the back-up offer, and the back-up offer be accepted by VenFin
shareholders holding more than 90% of the VenFin ordinary shares in
respect of which the back-up offer is made (that is, excluding those
VenFin ordinary shares held, at that time, by Remgro and/or its
subsidiaries).
The making of the offer is subject to the conditions precedent referred
to in paragraph 7 below. The implementation of the scheme will be subject
to the further conditions precedent set out in paragraph 8 below.
If the proposed acquisition is implemented, Remgro will offer the
participants in the VenFin Share Appreciation Right Scheme, the
opportunity to join the Remgro Share Appreciation Right Scheme on the
basis of equivalent value, terms, conditions and vesting dates (after
taking into account the proposed distribution of the DiData interest to
VenFin shareholders) as those applying to those members in terms of the
VenFin Share Appreciation Right Scheme.
The VenFin ordinary shares and B ordinary shares are collectively
referred to below as the "VenFin shares" and the relevant shareholders
are referred to as "the VenFin shareholders".
3. Purchase consideration
Based on the net asset value ("NAV") of Remgro and VenFin (excluding the
DiData interest which has to be distributed to VenFin shareholders as a
condition to the implementation of the proposed acquisition) as at the
value date of Friday 5 June 2009, VenFin shareholders will receive 1
Remgro share for every 6.25 VenFin shares held on the record date ("the
purchase consideration"). The number of Remgro shares in issue increases
by approximately 41.6 million as a result of the proposed acquisition.
The proposed acquisition will be effective from the operative date of the
scheme which is expected to be on or about Monday 21 September 2009.
The purchase consideration results in the following premia to VenFin
shareholders:
Premium (%)
Based on closing price on 5 June 2009 of 8.5
R20.95
Based on 30 day VWAP to 5 June 2009 of 13.0
R19.53
Based on 60 day VWAP to 5 June 2009 of 14.4
R18.62
Based on 90 day VWAP to 5 June 2009 of 17.7
R17.81
Note:
1) The value per VenFin share of the DiData interest has been added to
the purchase consideration, based on the respective closing prices
or VWAP as may be the case, for the purposes of calculating the
premia.
The offer has been based on the assumption that no dividend, distribution
or similar payment, other than the distribution of the DiData interest,
is declared or made by VenFin to VenFin shareholders between the date of
this announcement and the date on which the scheme becomes operative or
fails or the date on which the back-up offer closes or fails, whichever
date is later.
4. Rationale
Remgro is an investment holding company. Its interests consist of
investments in banking and financial services, medical services,
petroleum products, printing and packaging, mining, food, wine and
spirits and various other trade mark products.
VenFin is an investment holding company, focusing on growth investment
opportunities. VenFin`s experience lies in the telecommunications, media,
information technology and other technology sectors.
The merger has numerous benefits for both Remgro and VenFin shareholders.
For Remgro shareholders, the benefits of the proposed acquisition
include:
- the majority of assets acquired have stable cash flows;
- increasing Remgro`s relative exposure to unlisted investments;
- removing potential conflicts of interest between Remgro and VenFin;
- exposure to investment sectors not represented in the current
portfolio; and
- access to potentially high growth investment opportunities.
5. Pro forma financial effects of the proposed acquisition on Remgro
shareholders
The unaudited pro forma financial effects of the proposed acquisition on
Remgro shareholders set out below are based on the Remgro results for the
12 month period to 31 March 2009 and the VenFin results for the 12 month
period to 31 December 2008. The unaudited pro forma financial effects are
the responsibility of the board of directors of Remgro and have been
prepared for illustrative purposes only and because of their pro forma
nature may not give a fair reflection of Remgro`s financial position or
results of operations after the proposed acquisition.
The unaudited pro forma financial effects of the proposed acquisition on
Remgro shareholders are set out below:
Before the Change due After the %
proposed to the proposed change
acquisition proposed acquisition
(1) acquisition (2), (3),
(4)
Earnings per
share 9,607.9 (780.9) 8,827.0 (8.1)
("EPS")(cents)
Continuing
operations 599.2 (50.7) 548.5 (8.5)
Discontinued
operations 9,008.7 (730.2) 8,278.5 (8.1)
Headline EPS
(cents) 987.7 (57.3) 930.4 (5.8)
Continuing
operations 671.5 (31.7) 639.8 (4.7)
Discontinued
operations 316.2 (25.6) 290.6 (8.1)
Diluted EPS
(cents) 9,570.4 (785.2) 8,785.2 (8.2)
Continuing
operations 584.6 (49.9) 534.7 (8.5)
Discontinued
operations 8,985.8 (735.3) 8,250.5 (8.2)
Diluted headline
EPS (cents) 954.8 (55.3) 899.5 (5.8)
Continuing
operations 659.2 (31.1) 628.1 (4.7)
Discontinued
operations 295.6 (24.2) 271.4 (8.2)
NAV per share
(Rand) (5) 80.75 (0.22) 80.53 (0.3)
Net tangible
asset value per 79.91 (0.15) 79.76 (0.2)
share (Rand)
Number of shares
in issue 471.5 41.6 513.1 8.8
(millions)
Weighted average
number of shares 471.8 41.6 513.4 8.8
in issue
(millions)
Notes and assumptions:
1) The financial information in the "Before the proposed acquisition"
column has been based on:
- for income statement purposes, Remgro`s published and audited
income statement for the 12 month period ended 31 March 2009;
and
- for balance sheet purposes, Remgro`s published and audited
balance sheet as at 31 March 2009.
2) The unaudited pro forma income statement of Remgro has been prepared
assuming that Remgro acquired VenFin with effect from 1 April 2008
for income statement purposes.
3) The unaudited pro forma balance sheet of Remgro has been prepared
assuming that the proposed acquisition was effected on 31 March 2009
for balance sheet purposes.
4) The number of shares in issue increases by approximately 41.6
million as a result of the proposed acquisition.
5) The NAV per share shown above in the unaudited pro forma financial
effects is the NAV per balance sheet which is based on the carrying
value of assets, whereas the proposed acquisition is done on the
market NAV`s and is NAV neutral to Remgro shareholders.
Remgro management expects that the proposed acquisition will be cash flow
accretive in the financial year to 31 March 2010.
6. Shareholder support
Following the cautionary announcement released on SENS on Monday 8 June
2009, Remgro has held discussions with a number of its major
shareholders, who have indicated support for the proposed acquisition.
At this stage Remgro has obtained signed undertakings of support from
Remgro shareholders who, at the date of this announcement, held
165,123,978 Remgro ordinary shares or 37.9% of the shares eligible to
vote at the general meeting.
In addition, at this stage Remgro has obtained signed undertakings of
support from VenFin shareholders who, at the date of this announcement,
held 80,865,815 VenFin ordinary shares or 47.3% of the shares eligible to
vote at the scheme meeting.
7. Conditions precedent to the offer ("offer conditions")
Remgro will only make the offer once the following offer conditions have
been fulfilled (or waived by Remgro, if applicable):
7.1 by no later than Thursday 9 July 2009, the VenFin board of
directors:
7.1.1. receive advice from an appropriate independent expert
confirming that the offer is fair to VenFin shareholders;
and
7.1.2 pass a resolution in terms of which they state that on the
basis of the above advice they intend to recommend that
the holders of VenFin ordinary shares vote in favour of
the scheme or accept the back-up offer (if applicable);
7.2 by no later than Monday 20 July 2009, the board of directors of
Remgro receive advice from an appropriate independent expert
confirming that the proposed acquisition is fair to Remgro
shareholders;
7.3 by no later than Thursday 9 July 2009, the holders of VenFin B
ordinary shares ("B shareholders") accept an offer from Remgro to
purchase all the VenFin B ordinary shares held by them on the same
commercial terms and otherwise mutatis mutandis on the same basis as
the offer made to the ordinary shareholders, save that the offer to
the B shareholders (and on acceptance thereof the resultant
agreement) will not be subject to all the scheme conditions referred
to in paragraph 8 below, but will instead be subject only to the
conditions precedent in paragraphs 8.1, 8.2, 8.7 and 8.8; and
7.4 by no later than Tuesday 30 June 2009, the VenFin Board irrevocably
and unconditionally undertakes in writing in favour of Remgro not to
make any distributions to the VenFin shareholders, other than the
distribution of the DiData interest, between the date of this
announcement and the date on which the scheme becomes operative or
fails or the date upon which the back-up offer closes or fails,
whichever date is the later.
Remgro will be entitled to waive any of the offer conditions above upon
written notice to that effect to VenFin prior to the date of the
fulfilment of the condition. In addition, Remgro will be entitled to,
subject to the approval of the Securities Regulation Panel ("SRP") (if
applicable), extend the date for fulfilment of any of the offer
conditions by 45 days in its own discretion upon written notice to that
effect to VenFin. The dates for fulfilment of all or any of the offer
conditions may in any event be extended by agreement in writing between
Remgro and VenFin, subject to the approval of the SRP, if applicable.
8. Conditions precedent to the scheme ("scheme conditions")
The scheme (if proposed) will be subject to (and will become operative
upon) the fulfilment of the following conditions precedent:
8.1 VenFin distributing the DiData interest to VenFin shareholders
before or on Friday 31 July 2009;
8.2 the requisite majority of Remgro shareholders in general meeting
passing all the shareholders` resolutions required for the
implementation of the offer before or on Monday 31 August 2009;
8.3 the High Court of South Africa ordering the convening of a scheme
meeting of VenFin ordinary shareholders before or on Friday 31 July
2009;
8.4 the scheme being approved by a majority representing not less than
three-fourths of the votes exercisable by the VenFin ordinary
shareholders present and voting, either in person or by proxy, at
the scheme meeting before or on Monday 31 August 2009;
8.5 the relevant Court sanctioning the scheme before or on Saturday 31
October 2009;
8.6 a certified copy of the order of Court sanctioning the scheme being
registered by the Companies and Intellectual Properties Registration
Office ("CIPRO") before or on Saturday 31 October 2009;
8.7 in respect of the implementation of the scheme, approval having been
obtained, to the extent required, from:
8.7.1 the Competition Authorities;
8.7.2 the South African Reserve Bank;
8.7.3 the JSE Limited ("JSE"); and
8.7.4 any other relevant regulatory authorities;
(either unconditionally or subject to conditions
acceptable to the party against whom the condition will be
enforceable), before or on Saturday 31 October 2009; and
8.8 any third party who will acquire a right or option, or to whom a
deemed offer will be made, to acquire any shares held by VenFin
and/or any of its subsidiaries in any other company, as result of
the proposed acquisition, waive such right, option or deemed offer
in writing by before or on Tuesday 14 July 2009.
Remgro will be entitled to waive the scheme condition in paragraph 8.8
above, in whole or in part, if applicable, upon written notice to that
effect to VenFin prior to the date required for fulfilment of the
condition. In addition, Remgro will be entitled to, subject to the
approval of the SRP, extend the date for fulfilment of any of the offer
conditions by 45 days in its own discretion upon written notice to that
effect to VenFin. The dates for fulfilment of all or any of the scheme
conditions may in any event be extended by agreement in writing between
Remgro and VenFin, subject to the approval of the SRP (if applicable).
9. Related party acquisition and appointment of independent advisor
Some of Remgro`s directors are considered related parties as a result of
the combined 20% economic interest that they hold in VenFin shares. As
such, the interests of the Remgro directors will be taken into account in
determining a quorum at the general meeting of Remgro shareholders where
Remgro shareholders will vote on the resolutions required to be passed to
implement the proposed acquisition, however, the voting rights attaching
to the shareholdings of these related parties (and the voting rights of
their associates) will not be taken into account in determining the
results of the voting at such meeting in relation to the resolutions
proposed in connection with the proposed acquisition.
In terms of the JSE Listings Requirements, a fairness opinion from an
independent advisor, acceptable to the JSE, is required for a related
party transaction. Deutsche Securities SA (Pty) Ltd ("Deutsche") has
therefore been appointed by the board of directors of Remgro as the
independent advisor and will consider the terms and conditions of the
proposed acquisition and whether such terms and conditions are fair to
Remgro shareholders. The full opinion of Deutsche and the basis for their
opinion will be included in the circular to Remgro shareholders referred
to in paragraph 1 above.
10. Salient dates and times
2009
Circular to be posted to Remgro shareholders Friday 24 July
on or about
Last day for Remgro shareholders to lodge Thursday 14 August
forms of proxy for the general meeting by
11:30 on
General meeting of Remgro shareholders to be Monday 17 August
held at 11:30 on
Results of the general meeting released on Monday 17 August
SENS on
Results of the general meeting published in Tuesday 18 August
the South African press on
Notes:
1) All times shown above are South African local times.
2) The above dates and times are subject to change. Any change will be
released on SENS.
11. VenFin announcement
Remgro shareholders are also referred to the separate announcement that
has been made by VenFin today, 23 June 2009, relating to the offer, which
can be obtained on VenFin`s website, www.venfin.com.
12. Withdrawal of cautionary announcement
Remgro shareholders are advised that, as a result of the publication of
this announcement, the relevant cautionary announcement is now withdrawn
and caution is no longer required to be exercised by shareholders when
dealing in their securities.
Stellenbosch
23 June 2009
Merchant bank and sponsor to Remgro
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Attorneys to Remgro
Cliffe Dekker Hofmeyr
Independent advisor
Deutsche Securities
Date: 23/06/2009 07:40:01 Produced by the JSE SENS Department.
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