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Hunt Leuchars & Hepburn Holdings Limited
(Registration number 1924/001164/06)
(Registered in the Republic of South Africa)
Ordinary Shares: Share code: HLH ISIN code: ZAE000003299
Preference Shares: Share code: HLHP ISIN code: ZAE000011441
Cautionary announcement relating to the restructure by
Robertsons Holdings (Proprietary) Limited ("Robertsons") of its interest in
the joint venture with Bestfoods Europe (Group) Limited ("Bestfoods Europe")
and the formation of a new venture with Unilever PLC ("Unilever")
1. Introduction
Rand Merchant Bank is authorised to announce that Hunt Leuchars & Hepburn
Holdings Limited ("HL&H") (a subsidiary of Remgro Limited) and Unilever have
entered into a Memorandum of Understanding in terms of which both Robertsons
(a wholly-owned subsidiary of HL&H) and Unilever propose to restructure
their interests in the existing joint venture between Robertsons and
Bestfoods Europe ("the Bestfoods Robertsons JV") resulting in a new venture
("the Unilever Bestfoods Robertsons venture") ("the proposed transaction").
The proposed transaction is subject to the conclusion of a definitive
agreement and the fulfillment of certain conditions precedent, the most
important of which are outlined in paragraph 4 below.
2. Background and rationale
On 1 July 1998, Robertsons and Bestfoods Europe entered into a joint venture
agreement incorporating the food interests and certain resources of
Robertsons and certain African and Israeli businesses of Bestfoods Europe,
to manufacture and market a range of food products predominantly in Southern
Africa and Israel as well as other African countries.
On 4 October 2000 Unilever formally completed the acquisition of the
worldwide interests of Bestfoods, of which Bestfoods Europe was a wholly-
owned subsidiary. As a consequence of such transaction, the parties have
agreed to restructure the existing Bestfoods Robertsons JV and their
respective food businesses in the territory.
In South Africa the food businesses of the existing Bestfoods Robertsons JV
are conducted through the joint venture's wholly-owned subsidiaries
Robertsons Foods (Pty) Limited and Robertsons Foodservice (Pty) Limited.
Unilever's South African food businesses are conducted through Unifoods and
Hudson & Knight which are operating divisions of Unilever South Africa (Pty)
Limited.
The expected benefits of the new venture are the creation of growth and
access to Unilever's trademarks, technology and services, resulting in
enhanced earnings for shareholders.
3. Salient terms
3.1. Consideration
The value attributed to Robertsons' 50% interest in the Bestfoods Robertsons
JV is R2,05 billion. After the restructuring of the existing JV, Robertsons
will retain a 41% interest in the Unilever Bestfoods Robertsons venture.
There will be no exchange of cash to effect the proposed transaction.
3.2. Territory
The new venture territory has been defined as Southern Africa and Israel.
The operating profit contribution from the territory is expected to be
approximately 60% from Southern Africa and 40% from Israel.
3.3. Effective date
The effective date of the proposed transaction is expected to be
1 January 2002, but is subject to the fulfillment of all of the conditions
precedent.
4. Conditions precedent
The definitive agreement will, inter alia, contain the following conditions
precedent:
- approval of the proposed transaction in general meeting by the
shareholders of HL&H; and
- approval by the necessary regulatory authorities, including the JSE
Securities Exchange South Africa, the South African Reserve Bank and the
South African Competition authorities.
5. Financial effects
The pro forma financial effects of the proposed transaction on the earnings
and net asset value attributable to HL&H shareholders will be disclosed in a
full terms notice on conclusion of the definitive agreement.
6. Further announcement
A further announcement, setting out more comprehensive details of the
proposed transaction, will be published on conclusion of the definitive
agreement. Until publication of such further announcement, shareholders are
advised to exercise caution in dealing in their shares.
Sandton
12 September 2001
Merchant bank and transactional sponsor
Rand Merchant Bank
Corporate Finance
A Division of FirstRand Bank Limited
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