| Fri 9 Mar 2012, 17:00 | | BAT - Brait SE - Acquisition by the company of 19% of Iceland Food Group |
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BAT
BRAIT
BAT - Brait SE - Acquisition by the company of 19% of Iceland Food Group
Limited ("Iceland") and withdrawal of cautionary announcement
BRAIT SE
(Registered in Malta as a European Company)
(Registration No.SE1)
Share code: BAT & ISIN: LU0011857645
("Brait" or "the Company")
ACQUISITION BY THE COMPANY OF 19% OF ICELAND FOOD GROUP LIMITED ("ICELAND")
AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Further to the cautionary announcement dated 17th February 2012,
shareholders are advised that the Company has entered into a transaction
alongside the founder and senior management to acquire the entire issued
share capital of Iceland. Brait invested GBP80 million to acquire a 19%
stake ("the Acquisition").
2. THE ACQUISITION
Rationale
Established in 1970 by Malcolm Walker and his business partner with just
GBP60 of capital, Iceland now operates over 700 stores across the UK and
reported year-end sales of GBP2.4bn to March 2011. The group, which
consists of value food retailer Iceland Foods, discount frozen food
retailer Cooltrade and frozen food exporter ITEX, continues to invest
heavily in frozen food innovation, launching over 200 new products in the
past year alone.
Iceland`s business model centres on a frozen-led grocery proposition,
supported by chilled and ambient (grocery) categories. The management
team stresses that value, not price, is the key attraction to its
customers, and whilst Iceland is most commonly synonymous with frozen
foods, the overall offering is family orientated with a heavy focus on
value for money. By leveraging its scale and private label offering in
its core categories Iceland is able to offer customers consistently low
prices.
This Acquisition presents Brait with an opportunity to partner an
entrepreneurial management team in a successful business exposed to a
strong performing segment of the market alongside international market
leading retail investor groups.
A more detailed overview of the business will be presented at the
Company`s upcoming results presentation.
Terms of the Acquisition
The effective date of the Acquisition is 9 March 2012. This Acquisition
values the business at GBP1.45 billion before transaction costs and is
based on a sustainable historic EBITDA of GBP230 million, implying an
entry multiple of 6.3x.
The consideration
The buyout is backed by a GBP860 million all-senior debt package funded
by Credit Suisse, Deutsche Bank, HSBC, Nomura and RBS, as well as a
GBP250 million vendor loan note. The equity funding has been provided by
existing senior management acquiring 43%, with the remaining equity
acquired in equal proportions by Brait, Lord Kirkham, founder of DFS
Furniture Group, and The Landmark Group, a leading Middle Eastern retail
group.
3. CONDITIONS PRECEDENT
There are no conditions precedent to concluding the Acquisition.
4. WITHDRAWAL OF CAUTIONARY
As all the material Acquisition information is contained herein, caution
is no longer required to be exercised by shareholders when dealing in
their Brait securities.
Sandton
9 March 2012
Merchant bank and sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 09/03/2012 17:00:04 Produced by the JSE SENS Department.
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