| Thu 26 Jan 2012, 10:00 | | SHF - Steinhoff International Holdings Limited - Firm intention by Steinhoff |
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SHF
SHF
SHF - Steinhoff International Holdings Limited - Firm intention by Steinhoff
to make a partial offer to the shareholders of JD Group Limited to acquire
control of JD Group, in exchange for shares in KAP International Holdings
Limited
STEINHOFF INTERNATIONAL HOLDINGS LIMITED
Incorporated in the Republic of South Africa
(Registration Number 1998/003951/06)
Share code: SHF
ISIN: ZAE000016176
("Steinhoff")
FIRM INTENTION BY STEINHOFF TO MAKE A PARTIAL OFFER TO THE SHAREHOLDERS OF
JD GROUP LIMITED ("JD GROUP") TO ACQUIRE CONTROL OF JD GROUP, IN EXCHANGE
FOR SHARES IN KAP INTERNATIONAL HOLDINGS LIMITED ("KAP")
1. INTRODUCTION AND BACKGROUND
Steinhoff shareholders are referred to the announcement published on
the Securities Exchange News Service ("SENS") on 18 October 2011
("October Announcement") in which it was announced that Steinhoff`s
South African Industrial assets would be disposed of to KAP
International Holdings Limited ("KAP") in exchange for KAP shares ("KAP
Transaction") and that Steinhoff had been granted call options in
respect of 27.2 million JD Group shares ("JD Group Call Options"). The
JD Group Call Options , if and to the extent exercised, would give
Steinhoff the right to acquire from the grantors of the JD Group Call
Options ("Option Grantors") such underlying JD Group shares in exchange
for KAP shares on the basis of 16 KAP shares for every JD Group share
acquired. In addition to the JD Group Call Options, Steinhoff received
indications from other JD Group shareholders, holding, in aggregate, 11
million JD Group shares, of their intention to make all or any of these
shares available to Steinhoff for purchase on the same terms and
conditions as the JD Group Call Options.
2. STATUS OF THE KAP TRANSACTION AND JD GROUP OFFER
As stated in the SENS announcement published by KAP on 18 January 2012,
all resolutions required to give effect to the KAP Transaction were
approved by the requisite majorities of KAP shareholders at the general
meeting held on 18 January 2012. Accordingly, the only remaining
condition precedent to the KAP Transaction is the approval of the
Competition Authorities. In line with the rationale as set out in the
October Announcement, Steinhoff has communicated its firm intention to
the board of directors of JD Group to extend a partial offer to the JD
Group shareholders ("JD Group Offer") to acquire control of JD Group
("JD Group Change of Control") in accordance with the terms as
summarised in paragraph 4 below. The JD Group Offer will be
conditional, inter alia, on the Competition Authorities approving the
JD Group Change of Control.
Following the implementation of the JD Group Offer, the listings of KAP
and JD Group on the main board of the JSE Limited ("JSE") will be
retained. KAP and JD Group will both become listed operating
subsidiaries of Steinhoff, in which Steinhoff will hold approximately
62% and 50.1%, respectively.
3. RATIONALE
As stated, Steinhoff is an active investment holding company focusing
on investing in complementary assets that could provide benefits to, or
derive benefits from, the existing businesses within its portfolio. The
JD Group Offer represents such an investment opportunity and will be a
major step towards Steinhoff formalising its strategic positioning as a
listed investment holding company which has listed or listable
operating subsidiaries and associates, as distinct business units, each
with its own investment and growth focus, namely:
* Steinhoff Europe, an integrated mass-market retailer of furniture
and household goods, predominantly serving the discount segment in
Europe. Steinhoff Europe is wholly-owned by Steinhoff and may be
listed separately at the appropriate time and subject to market
conditions;
* KAP, which after the implementation of the KAP Transaction, will
be a listed diversified industrial operating subsidiary of
Steinhoff focusing on Southern Africa and other emerging markets;
* JD Group, which upon the implementation of the JD Group Offer,
will be an emerging market retail subsidiary of Steinhoff
distributing furniture and household goods, motor vehicles and DIY
products, supported by a consumer finance business. JD Group will
be the operating unit within which all of Steinhoff`s Southern
African retail expansion initiatives will be accommodated; and
* a worldwide property portfolio consisting of retail, industrial
and commercial real estate assets.
The above corporate structure will contribute to enhanced growth
prospects of the operating subsidiaries, each with its own investment
focus and autonomous management teams and governance policies. As a
result, the underlying value of Steinhoff will become more visible and
transparent and, together with enhanced financial flexibility, should
contribute to growth in shareholder value at all levels.
4. PROPOSED MECHANICS OF THE JD GROUP OFFER
Steinhoff currently holds 69.9 million JD Group shares representing
32.7% of JD Group`s issued share capital of 215.5 million shares (net
of treasury shares).
In order to ensure equal treatment of all JD Group shareholders (other
than Steinhoff), including the Option Grantors ("JD Group Minorities"),
and in compliance with the Companies Act 71 of 2008 (the "Companies
Act") and the Regulations administered by the Takeover Regulation Panel
("TRP"), Steinhoff will, subject to the conditions precedent listed in
paragraph 5 below, offer JD Group Minorities the right to sell to
Steinhoff 26.22% of their JD Group shares in exchange for KAP shares on
the basis of 16 KAP shares for every JD Group share tendered, equating
to 38.2 million JD Group shares held.
All JD Group Minorities shall have the right to tender more than 26.22%
of their JD Group shareholdings in the JD Group Offer ("Excess
Applications"). To the extent applicable, at the close of the JD Group
Offer all Excess Applications will be proportionately reduced on an
equitable basis, in order to ensure Steinhoff acquires 38.2 million JD
Group shares in consideration for a total of 611.2 million KAP shares
("KAP Shares").
Irrevocable undertakings have been received from the Option Grantors
and the holders of the other 11 million JD Group shares referred to in
paragraph 1 above, in terms of which they have undertaken: i) to fully
accept the JD Group Offer; and ii) if and to the extent that JD Group
Minorities have accepted the JD Group Offer in respect of less than a
total of 38.2 million JD Group shares, to tender additional JD Group
shares representing such shortfall.
5. FINANCIAL EFFECTS
On the assumption that Steinhoff will acquire an additional 17.4% of JD
Group in consideration for the KAP Shares as set out above, the JD
Group Change of Control will have an insignificant effect (less than
3%) on Steinhoff`s pro forma headline earnings, earnings and net asset
value per share.
The financial effects on a JD Group shareholder of accepting the JD
Group Offer will be set out in the related circular ("Offer Circular")
which will be mailed to JD Group Minorities within 20 business days of
the date of this announcement, or such later date as may be approved by
the TRP.
6. CONDITIONS PRECEDENT
The JD Group Offer is subject to the fulfilment of the following
conditions precedent, namely:
a. the KAP Transaction becoming unconditional;
b. the Competition Authorities approving the JD Group Change of
Control;
c. an Independent Expert acceptable to the TRP, to be appointed by
the Independent Board of JD Group, expressing an opinion as to
whether the terms and conditions of the JD Group Offer are fair
and reasonable to JD Group Minorities. A copy of such opinion will
be contained in the Offer Circular;
d. the TRP and the JSE (insofar as the JD Group Offer represents a
Category 2 transaction for Steinhoff in terms of the Listings
Requirements of the JSE) approving the Offer Circular and other
documents relevant thereto;
e. Steinhoff receives acceptances from JD Group Minorities in respect
of 38.2 million JD Group shares as contemplated by section
125(3)(b)(i) of the Companies Act. As stated in paragraph 4 above,
irrevocable undertakings have been received from the Option
Grantors and the holders of a further 11 million JD Group shares
to tender up to a maximum of 38.2 million JD Group shares;
f. the JD Group Offer being approved as a partial offer, as
contemplated by section 125(3)(b)(ii) of the Companies Act, by
independent holders of JD Group shares in aggregate controlling
more than 50% of all JD Group shares, at a general meeting to be
convened in terms of the Offer Circular ("JD Group General
Meeting"). In this regard, irrevocable undertakings from
independent holders holding 51% of the aggregate number of JD
Group shares held by JD Group Minorities have been obtained to
support all of the resolutions to be proposed at the JD Group
General Meeting;
g. the JSE giving effect to the listing of the KAP shares to be
received by Steinhoff in terms of the KAP Transaction, which
listing was already approved on 14 December 2011; and
h. the Exchange Control Division of the South African Reserve Bank
approving the Offer Circular.
7. OTHER MATTERS AND TIMING OF THE JD GROUP OFFER
Upon the KAP Transaction being implemented, Steinhoff will have the KAP
Shares available to discharge full acceptance of the JD Group Offer.
It is currently estimated that the Offer Circular will be posted during
the latter part of February 2012, following which the JD Group General
Meeting will be held during March 2012. The JD Group Offer will open on
the first business day after posting of the circular and will remain
open for a period of not less than 30 business days. A copy of the
circular to KAP shareholders dated 17 December 2011, which contains
full details of the KAP Transaction and the business of KAP, as
reconstituted after implementation of the KAP Transaction, will be
attached to the Offer Circular marked "For Information Purposes". A
copy of this circular is also available at www.kapinternational.com.
Steinhoff will publish a SENS announcement forthwith after the
fulfilment of the conditions precedent set out in paragraph 6 above,
which will contain full details of the salient dates of the JD Group
Offer, including the procedure for its acceptance.
8. STEINHOFF DIRECTORS RESPONSIBILITY STATEMENT
The directors of Steinhoff accept responsibility for the information
contained in this announcement. To the best of their knowledge and
belief the information contained herein is true and nothing has been
omitted which is likely to affect the importance of the information.
Wynberg, Sandton
26 January 2012
Investment Bank: Investec Corporate Finance
Sponsor: PSG Capital (Proprietary) Limited
Joint Investment Bank to Steinhoff: The Standard Bank of South Africa
Limited
Legal Adviser: Cliffe Dekker Hofmeyr Inc
Date: 26/01/2012 10:00:01 Produced by the JSE SENS Department.
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