Massmart Holdings Limited
(Registration number 1940/014066/05)
("Massmart")
ISIN: ZAE000029534 JSE Share code: MSM
ACQUISITION OF FURNEX BUSINESSES
Massmart is pleased to announce the acquisition of the business of Furnex
Stores (Pty) Limited, including the shares in Furnex Dealers Indemnity (Pty)
Limited, with effect from 1 January 2002. The transaction is subject to
certain suspensive conditions, including the approval of the transaction by
the members of Furnex Capital, the Competitions Commission and the signing
by management of service contracts and restraint agreements.
The Furnex business to be acquired acts as a wholesale supplier of
appliances, hi-tech, bedding and cellphone equipment to 384 independent
furniture dealers throughout Southern Africa and in the year to September
achieved sales throughput of R474million.
The acquisition satisfies all Massmart's strategic and acquisition criteria
and builds on the Groups demonstrated competence in the acquisition,
integration and enhancement of entrepreneurially founded businesses trading
in product categories similar to Massmart.
The Furnex business model is identical to Massmart's Shield business. In
due course both will be incorporated into a new division, where synergies
will be explored and realised. It is anticipated that this structure will
create value for shareholders and Furnex dealers, in addition to that
created by Massmart's expertise in the procurement, ranging and marketing of
General Merchandise. Due to the mainly peri-urban location of Furnex
dealers and a differing customer and merchandise profile, there is little
overlap with Makro, Dion and Game.
The purchase price, to be funded from Massmart's own resources, is R44.5
million.
In the year to September 2001, the businesses to be acquired produce a
Profit before tax of approximately R11.3 million and are budgeting to
produce a Profit before tax of R17 million in the year to 31 March 2003.
The effect of the acquisitions on Massmart's earnings for the year to June
2002 is expected to be positive, but not material.
Sandton
18 December 2001
Sponsor
UBS Warburg
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