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New Clicks Holdings Limited - Acquisition by New Clicks of the business of New
United Pharmaceutical Distributors (Proprietary) Limited ("UPD")
New Clicks Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1996/000645/06)
Sharecode: NCL ISIN: 000014585
("New Clicks")
Acquisition by New Clicks of the business of New United Pharmaceutical
Distributors (Proprietary) Limited ("UPD")
1. Introduction
New Clicks shareholders are referred to the cautionary announcement dated 13
June 2002. Investec Bank Limited is hereby authorised to announce that New
Clicks has entered into an agreement ("the acquisition agreement") in terms of
which, subject to the fulfillment of the suspensive conditions set out in
paragraph 4 below ("the suspensive conditions"), New Clicks will acquire the
business of UPD as a going concern ("the acquisition"), including the assets and
liabilities relating thereto at the effective date, being the first business day
of the month following the month in which the suspensive conditions are
fulfilled or waived ("the effective date").
UPD is wholly owned by JR 163 Investments (Proprietary) Limited ("JR") which in
turn is owned by Standard Corporate and Merchant Bank (a division of The
Standard Bank of South Africa Limited), Gensec NSA Equity Fund and certain
management of JR.
2. Background to UPD and rationale for the acquisition
UPD is a wholesale distributor of pharmaceutical and front-shop products to in
excess of 4 000 pharmacies, doctors and hospitals in South Africa and around
Southern Africa. UPD has a highly flexible and extensive distribution network
with twice daily delivery to most customers in South Africa and once a day to
customers in Southern Africa. There are an additional 1 200 non-pharmaceutical
customers and a delivery fleet that travels 42 000 km per day. For the year
ended 30 April 2002, UPD had turnover of R2 billion and a profit after tax of
R43.227 million.
By implementing the acquisition, New Clicks will add to their distribution
capability the specialised area of pharmaceuticals distribution, where factors
such as expiry dates, cold storage, twice-daily deliveries, security and product
handling are paramount, as are stock turns and managing debt. The acquisition
adds substance to the distribution services the New Clicks group of companies
can provide to pharmacies throughout South Africa. In addition, the acquisition
enhances the potential to grow and develop the Link franchise.
3. Salient terms of the acquisition
A full due diligence exercise has been completed on UPD. The consideration
payable by New Clicks in terms of the acquisition is R280.975 million which
equates to a historic price earnings multiple of 6.5 and will be settled by the
issue of 39 024 375 New Clicks shares ("the consideration shares") at R7.20 per
share cum any future dividends. In terms of the acquisition agreement, UPD
have agreed to limit the tradability of the consideration shares for a period of
time.
Long service agreements have been entered into between New Clicks and key UPD
management.
4. Suspensive conditions
The acquisition is subject to the fulfillment of, inter alia, the following
suspensive conditions:
the approval of the acquisition in terms of the Competition Act, No. 89 of 1998;
and
any other requisite regulatory approvals.
5. Financial effects
Based on the results of New Clicks for the rolling twelve month period ended 28
February 2002 the audited profit after tax of UPD for the year ended 30 April
2002 of R43.227 million and a tangible net asset value for UPD of R180 million
as at 30 April 2002:
on the assumption that the acquisition was implemented on 1 March 2001, the
undiluted headline earnings per New Clicks share for the rolling twelve month
period ended 28 February 2002 would have increased by 8.4% from 64.3 cents to
69.7 cents and the fully diluted headline earnings per New Clicks share would
have increased by 9.1% from 60.6 cents to 66.1 cents; and
on the assumption that the acquisition was implemented on 28 February 2002, the
net asset value per New Clicks share at 28 February 2002 would have increased by
10.1% from 383.2 cents to 421.7 cents and the tangible net asset value per New
Clicks share would have increased by 3.3% from 358.3 cents to 370.1 cents.
Cape Town
16 July 2002
Merchant bank Sponsor
Investec Corporate Finance Investec Securities Limited
Investec Bank Limited Member of the JSE
Attorneys to New Clicks Attorneys to UPD
Sonnenberg Hoffmann Galombik Cliffe Dekker Incorporated
Indirect sellers Auditors
SCMB Capital Investments Division KPMG Inc.
(a division of The Standard Bank (Registered Accountants and
of South Africa Limited) Auditors)
Gensec NSA Equity Fund
Date: 16/07/2002 09:00:00 AM Produced by the JSE SENS Department
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