| Mon 25 Jun 2001, 0:00 | | Peregrine/ Mercury Consolidated - Acquisition |
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PEREGRINE HOLDINGS LIMITED
Registration number 1994/006026/06
("Peregrine" or "the company")
MERCURY CONSOLIDATED
HOLDINGS (PTY) LIMITED
Registration number 1997/011413/07
("Mercury")
Announcement regarding the acquisition of the entire issued share capital of
Mercury by Peregrine
1. Introduction
Peregrine Corporate Advisory Services (Proprietary) Limited and Werksmans
Sponsors (Proprietary) Limited are authorised to announce that Peregrine has
entered into an agreement with Farmprops 57 (Proprietary) Limited, Farmprops
58 (Proprietary) Limited, certain minority shareholders and the Mercury
Consolidated Holdings Employee Share Trust (collectively "the sellers") to
acquire the entire issued share capital of Mercury for a total purchase
consideration of R65 million ("the acquisition").
2. Nature of business of Mercury
Mercury is the holding company of a group of companies that provide a range
of specialised financial services, including the structuring of product and
broking of transactions in respect of equities, derivatives, bonds and other
debt instruments. The client base includes asset managers, pension funds,
life companies, linked product providers and local and international trading
banks.
In addition, Mercury has a 35% shareholding in RisCura Solutions
(Proprietary) Limited, which provides independent risk decision support
consulting services and software to banks, pension funds and asset managers.
3.Rationale for the transaction
The acquisition is expected to significantly enhance Peregrine's range of
structuring, broking and risk management services, broaden Peregrine's
client base both locally and internationally and augment management depth
and marketing capability in Peregrine's "asset management and related
services" division.
4. Terms and details of the transaction
4.1 The effective date of the acquisition is 1 April 2001.
4.2 The purchase consideration payable for the acquisition is R65 million
("the purchase consideration") and is based on warranted net profits after
tax of the Mercury group being R13,1 million for any consecutive twelve-
month period within the fifteen-month period commencing from the effective
date ("the profit warranty").
4.3 The purchase consideration will be adjusted according to the actual net
profits after tax achieved by Mercury during the period of the profit
warranty ("the profit warranty adjustment"), subject to a minimum purchase
consideration of R20,4 million and a maximum purchase consideration of R70
million.
4.4 The purchase consideration will be discharged as follows:
- R11,4 million in cash on fulfilment of the suspensive conditions referred
to in 6 below;
- R9,0 million in cash at the end of the profit warranty period;
- R44,6 million on determination of the net profits after tax of Mercury for
the profit warranty period, through the issue to the sellers of 14 866 667
Peregrine shares ("the consideration shares"). The payment of the
consideration shares is subject to the profit warranty adjustment.
4.5 The shares issued pursuant to the acquisition will be subject to certain
restrictions on sale, in terms of which, inter alia, the sellers will be
entitled to dispose of a maximum of 20% of the consideration shares during
each of the five years commencing 1 April 2002.
5. Financial effects
The table below sets out the pro forma effects of the acquisition on the
headline earnings per Peregrine share ("EPS"), the net asset value per
Peregrine share ("NAV") and the net tangible asset value per Peregrine share
("NTAV"), based on the following assumptions:
- the "Before" column is based on the audited annual results of the
Peregrine Group for the year ended 31 March 2001;
- the acquisition had been effective from 1 April 2000 to 31 March 2001; and
- the net profits after tax of Mercury for the year ended 31 March 2001
amounted to R13,1 million.
Before After % change
EPS (cents) 49,9 52,3 4,8
NAV (cents) 183,5 196,7 7,2
NTAV (cents) 176,2 170,5 (3,2)
6. Conditions precedent
The transaction is subject to the following:
- the approval, in so far as may be necessary, of the JSE Securities
Exchange South Africa, the Bond Market Exchange of South Africa, and the
South African Futures Exchange; and
- the approval by the Competition Commission in terms of section 14 of the
Competition Act.
Sandton
25 June 2001
Joint sponsor
Peregrine
Peregrine Corporate Advisory Services (pty) Ltd
Joint sponsor and attorneys to Peregrine
Werksmans Attorneys
Attorneys to Mercury
Feinsteins Attorneys
Chartered Accountants (SA)
Registered Accountants and Auditors
