| Thu 30 Sep 2010, 9:11 | | TAS - Taste Holdings Limited - Acquisition of St Elmo`s and further cautionary |
|
TAS
TAS
TAS - Taste Holdings Limited - Acquisition of St Elmo`s and further cautionary
announcement
Taste Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 2000/002239/06)
JSE code: TAS ISIN: ZAE000081162
("Taste" or "the company")
ACQUISITION OF ST ELMO`S AND FURTHER CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Shareholders are referred to the cautionary announcement dated 31 August 2010
and are advised that Scooters Pizza (Pty) Limited ("the purchaser"), a wholly-
owned subsidiary of Taste, has entered into an agreement with St Elmo`s Trading
Company (Pty) Limited ("St Elmo`s"), St Elmo`s Advertising CC and Halben Foods
CC (collectively "the sellers") for the acquisition of the franchising, food
manufacturing and distribution business operated by the sellers ("the business")
with effect from 1 November 2010 ("effective date") ("the transaction").
2. NATURE OF THE BUSINESS
The business essentially comprises:
-St Elmo`s, a national, franchised chain of 40 pizza outlets founded in 1987 and
includes, inter alia, all franchise agreements and associated trademarks and
other intellectual property; and
-a food manufacturing and distribution facility with Hazard Analysis and
Critical Control Point accreditation of approximately 600 square metres ("the
facility") together with all recipes and associated intellectual property.
Certain tangible assets related to the business are also acquired which include,
inter alia, stock, debtors and fixed assets.
3. RATIONALE FOR THE ST ELMO`S ACQUISITION
St Elmo`s offers a good strategic fit with Taste`s existing pizza business,
Scooters Pizza. The rationale for the transaction is, inter alia, as follows:
- The transaction will add critical mass to the Taste food division, allowing
for increased economies of scale across the franchising and manufacturing
divisions;
- the transaction is in line with the strategic objective of vertically
integrating the food division; and
- the transaction is expected to be earnings enhancing to Taste from the first
year.
4. PURCHASE CONSIDERATION
The purchase consideration is R8 008 913 plus:
-the value of the stock in the distribution centre at the effective date; and
-the value of the debtors of the business adjusted for long outstanding and
other non-recoverable items at the effective date.
The purchase consideration is payable in cash on the effective date.
Taste intends to fund the purchase consideration through a combination of cash
balances and debt funding.
5. CONDITIONS PRECEDENT
There are no outstanding conditions precedent relating to the transaction.
6. CLASSIFICATION OF THE TRANSACTION
In terms of the JSE Listings Requirements, the transaction is classified as a
category 2 transaction and, accordingly, shareholder approval is not required.
7. FINANCIAL EFFECTS OF THE TRANSACTION AND FURTHER CAUTIONARY ANNOUNCEMENT
The unaudited pro forma financial effects of the transaction will be announced
in due course.
Shareholders are accordingly advised to continue to exercise caution when
dealing in the company`s securities until a further announcement, containing the
financial effects of the transaction, is made.
Johannesburg
30 September 2010
Designated adviser
Vunani Corporate Finance
Legal advisor to Taste
Mahons Attorneys
Date: 30/09/2010 09:11:02 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.
