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KGM - Kagiso Media Limited - Announcement of a fir 22 Dec 2011
KGM
KGM
KGM - Kagiso Media Limited - Announcement of a firm intention by Kagiso Media to
make an offer to acquire the entire issued share capital of the Juta Group
Including Juta & Company Limited
Kagiso Media Limited
(Incorporated in the Republic of South Africa)
Registration number: 1957/000036/06
Share code: KGM ISIN: ZAE000014007
("Kagiso Media" or "the Company")
ANNOUNCEMENT OF A FIRM INTENTION BY KAGISO MEDIA TO MAKE AN OFFER TO ACQUIRE THE
ENTIRE ISSUED SHARE CAPITAL OF THE JUTA GROUP INCLUDING JUTA & COMPANY LIMITED
("FIRM INTENTION ANNOUNCEMENT")
1. INTRODUCTION
The board of directors of Kagiso Media is pleased to announce that Kagiso
Media has made an offer ("Offer") to acquire 100% of the shares in Juta &
Company Limited ("Juta & Co"), Juta Investments (Proprietary) Limited
("Juta Investments") and Imfundo Investments (Proprietary) Limited
("Imfundo") (collectively the "Juta Group") through the following linked
transactions, which will be implemented in the sequence outlined below -
- Kagiso Media acquiring all of the shares in (and shareholder loans to)
Juta Investments and Imfundo from the current shareholders of those
companies (with the exception of the shares held by Juta & Co in those
companies); and
- Kagiso Media acquiring the remaining shares in Juta & Co from a large
number of other shareholders of Juta & Co.
These transactions ("the Transactions") will be implemented in the
following sequence -
- a scheme of arrangement pursuant to which Kagiso Media will acquire
all the shares in Juta & Co which are not held by Juta Investments or
Imfundo;
- a scheme of arrangement pursuant to which Kagiso Media will acquire
all the shares in Juta Investments which are not held by Juta & Co;
and
- the conclusion of a written agreement ("Sale Agreement") between
Kagiso Media and the shareholders of Imfundo, whereby Kagiso Media
acquires all the shares in (and loans to) Imfundo (save for the shares
that are already held by Juta & Co).
All the above shares and loans hereafter referred to as the "Securities"
which transactions will take place in the sequence outlined above, on the
same day, and will all be interdependent and conditional upon each other.
2. PURCHASE CONSIDERATION
The total consideration payable by Kagiso Media, to acquire all the
Securities will be R300 000 000 (three hundred million rand), to be paid in
cash on the closing date, which represents a consideration of R9.24 for
each Juta & Co share (and any shareholder loans).
3. RATIONALE FOR THE PROPOSED TRANSACTION
The Company had identified the ownership of information/content together
with annuity revenue streams to be a strategic imperative to achieve its
growth, revenue diversification and profitability objectives. This is
achieved with the acquisition of 100% of Juta & Co. Kagiso Media would
become a leading provider of information solutions to the justice and legal
market in Southern Africa. Through the proposed transaction, Kagiso Media
would have the potential to grow its share of the information/content
market in South Africa and Sub-Saharan Africa. There are substantial
synergies with other existing businesses units within Kagiso Media,
particularly with Knowledge Factory and the digital business.
4. MAIN BUSINESS OF JUTA & CO
Juta`s history dates back to 1853 and has grown to be the leading South
African provider of legal and regulatory information. Juta is the largest
local publisher of quality student textbooks in the fields of Commerce,
Accounting, Communications, Social Science, Health, Education and the Law.
It also publishes peer-reviewed research relevant to Southern Africa under
the UCT Press imprint and has a wide range of accredited training
programmes and publications for adult learners. Juta Education provides an
extensive range of educational products while Juta Bookshops and Juta-
online service the book needs of the school, academic, and professional
communities.
5. CONDITIONS PRECEDENT
The proposed transaction will be subject to, inter alia, the fulfilment of
the following conditions precedent by no later than 31 March 2012 or such
later date as Kagiso Media and the Juta Group may agree to in writing:
- the conclusion of the Sale Agreement;
- the approval of the Juta & Co Scheme by a special resolution of the
Juta & Co Shareholders, as contemplated in section 115(2)(a) of the
Companies Act, before the holding of the Juta Investments Scheme;
- the approval of the Juta Investments Scheme by a special resolution of
the Juta Investments Shareholders, as contemplated in section
115(2)(a) of the Companies Act; and
- the unconditional written approval of the proposed transaction (or if
such approval is conditional, such conditions being satisfactory to
Kagiso Media, Juta & Co, Juta Investments and Imfundo) having been
obtained from:
- the Takeover Regulation Panel (TRP) (in terms of a compliance
certificate to be issued in terms of the Companies Act); and
- the Competition Commission, Competition Tribunal and/or Competition
Appeal Court, as the case may be and only to the extent required, in
terms of the Competition Act 89 of 1998, as amended.
6. PRO FORMA EARNINGS AND NET ASSET VALUE EFFECTS PERTAINING TO THE SCHEME
The unaudited pro forma financial effects of the Offer on Kagiso Media
shareholders, for which the directors of Kagiso Media are responsible, are
provided for illustrative purposes only to provide information about how
the Offer will affect the financial position of the Kagiso Media
shareholders by illustrating the effect thereof on basic earnings per share
("BEPS") and headline earnings per share ("HEPS") of Kagiso Media, had the
offer become operative on 1 July 2010 and the effect thereof on net asset
value per share ("NAVPS") and net tangible asset value per share ("NTAVPS")
of Kagiso Media if the offer had become operative on 30 June 2011. Because
of their nature the unaudited pro forma financial effects may not give a
fair presentation of Kagiso Media`s financial position and performance
after the offer. The unaudited pro forma financial effects have been
compiled using accounting policies that comply with International Financial
Reporting Standards ("IFRS") and that are consistent with those applied in
the audited consolidated financial statements of Kagiso Media for the 12
(twelve) months ended 30 June 2011.
Financial effects of the Before the Post the Post the
Juta & Co transaction disposal1 LexisNexis LexisNexis
disposal2 disposal,
including
acquisition
of Juta & Co3
Basic earnings per share 152.2 423.2 458.9
(cents)4
Headline earnings per share 153.1 118.5 139.2
(cents)4
Net asset value per share 519.0 823.9 731.8
(cents)5
Tangible net asset value per 165.0 490.7 383.9
share (cents)5
Weighted average number of 133 792 133 792 133 792
ordinary shares in issue
(`000)
NOTES:
1. The Kagiso Media Group "Before the disposal" results were extracted
from the published, audited results of the Kagiso Media Group for the
year ended 30 June 2011 as released on SENS on 23 September 2011.
2. Represents the unaudited pro forma financial effects after the
disposal.
3. Represents the unaudited pro forma financial effects after the
acquisition.
4. Earnings per Kagiso Media share effects are based on the following
principal assumptions:
- the disposal was effective on 1 July 2010;
- the acquisition was effective on 1 July 2010;
- deconsolidation of LexisNexis` proportionately consolidated
earnings and consolidation of 100% of Juta earnings;
- a non-recurring profit on the disposal of R483 million is
recognised together with the non-recurring capital gains tax of
R74 million;
- transaction costs of R3 million, which are once-off in nature;
- interest income has not been included.
5. NAV and TNAV per Kagiso Media Share effects are based on the following
principal assumptions:
- the disposal was effective on 30 June 2011;
- the acquisition was effective on 30 June 2011;
- derecognition of LexisNexis assets and liabilities which were
classified as held-for-sale amounting to R144 million and R62
million respectively;
- inclusion of Juta assets and liabilities acquired amounting to
R254 million and R77 million respectively;
- retained earnings increases by R409 million, reflecting the
non-recurring profit on the disposal of R483 million as reduced
by non-recurring capital gains tax of R74 million; and
- transaction costs of R3 million, which are once-off in nature.
7. FUNDING OF THE TRANSACTION
The acquisition of Juta & Co will be funded from group cash reserves.
8. CATEGORISATION AND WITHDRAWAL OF CAUTIONARY
The Transaction is a Category 2 transaction for Kagiso Media in terms of
section 9.5(a) of the JSE Listings Requirements and, accordingly, approval
of the Transaction by shareholders of Kagiso Media is not required.
Kagiso Media shareholders are advised that, as a result of the publication of
this announcement, the relevant cautionary announcement is now withdrawn and
therefore caution is no longer required to be exercised when dealing in Kagiso
Media shares.
Johannesburg
22 December 2011
Sponsor:Investec Bank Limited
Date: 22/12/2011 16:30:01 Produced by the JSE SENS Department.
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