| Thu 1 Jul 2010, 7:14 | | PIK - Pick n Pay Stores Ltd - Sale of Interfrank Group Holdings Pty Limited and |
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PIK
PIK
PIK - Pick n Pay Stores Ltd - Sale of Interfrank Group Holdings Pty Limited and
its subsidiaries
Pick n Pay Stores Ltd
(Incorporated in the Republic of South Africa)
(Registration number 1968/008034/06)
Share code: PIK
ISIN: ZAE000005443
SALE OF INTERFRANK GROUP HOLDINGS PTY LIMITED AND ITS SUBSIDIARIES ("FRANKLINS")
In compliance with Section 9.15 of the JSE Listing Requirements, the following
information is disclosed:
On 1 July 2010, Pick n Pay Stores Limited`s subsidiary company Pick n Pay
Retailers (Pty) Limited ("Pick n Pay") signed an agreement for the sale of its
Australian subsidiary, Franklins, to Metcash Trading Limited ("Metcash"), a
company registered in Australia.
Rationale
Pick n Pay entered the Australian market via the acquisition of Franklins and
Fresco stores in 2001. The decision to sell Franklins followed a strategic
review which commenced several months ago. This review confirmed the excellent
progress made by Franklins` management team and staff in transforming the
business. However, the Board felt that the Franklins business had not yet
achieved critical mass and the decision was made to find an investment partner
or purchaser for the business. The unsolicited offer from Metcash at a
compelling price, which reflects the greater strategic value of Franklins to
Metcash than under Pick n Pay`s ownership, was then received and accepted.
Franklins operates 77 corporate retail supermarkets in New South Wales,
Australia, that sell food and general merchandise. They also supply 8
independent franchisees trading as Franklins Family supermarkets.
Terms of the transaction
Completion of the transaction is expected to occur by 30 September 2010, at
which time Pick n Pay will sell 100% of the issued share capital to Metcash for
AUD215 million (approximately R1.4 billion), subject to Metcash obtaining
informal clearance from the Australian Competition and Consumer Commission
(ACCC) and usual landlord consents.
The proceeds of the sale will be utilised by Pick n Pay for various strategic
business enhancement initiatives in southern Africa.
As part of the transaction it is mutually agreed by Franklins and Metcash that
they will withdraw all current litigation against each other.
Financial effects
The financial effects of the transaction on the Pick n Pay Stores Limited Group,
assuming that the sale was effective on the first day of the financial year
ended 28 February 2010, are:
Before After Percentage
transaction transaction change
R million R million %
Year ended 28 February 2010
Headline earnings and diluted
headline earnings 1 012.1 1 072.2 5.9
Cents Cents %
Headline earnings per share 213.9 226.6 5.9
Diluted headline earnings per 210.6 223.1 5.9
share
As at 28 February 2010
Net asset value per share 512.5 568.4 10.9
Tangible net asset value per 274.6 486.1 77.0
share
The assumptions used in the calculation of the above are as follows:
Headline earnings and diluted headline earnings, after the transaction, exclude
the profit after tax (before losses on sale of assets) of R21.9 million made by
Franklins and include interest earned on the sale proceeds for the full
financial year at a rate of 5.8% per annum after tax.
The sale proceeds of AUD215 million are translated into SA Rand at a rate of
R6.61: AUD, the average rate on 29 June 2010.
As reported at 28 February 2010, the net asset value and tangible net asset
value include the director`s valuation of investment property.
The net assets of Franklins subject to the sale, at 28 February 2010, were
AUD184.9 million (R1.2 billion at the exchange rate in 2 above), which is more
than covered by the proceeds of the sale.
Chairman`s comments
Chairman, Gareth Ackerman stated that the decision to sell was a difficult one,
especially as the management and staff of Franklins have put so much into
building the business over the years. He expressed gratitude to the recently
retired MD, Aubrey Zelinsky, Acting MD and long standing FD, Roni Perlov, and
the Franklins staff for their efforts and achievements. The sale will enable
Pick n Pay to concentrate its efforts in expanding in markets where it can
leverage off its substantial South African base.
By order of the board of directors
Investec Bank Limited
1 July 2010
Date: 01/07/2010 07:14:43 Produced by the JSE SENS Department.
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