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Chemserve - Acquisition of remaining 50% of Ondeo Nalco SA from Ondeo Nalco
Company of the US
Chemical Services Limited
(Incorporated in the Republic of South Africa)
(Registration number 1967/003338/06)
Share code: CHE ISIN code: ZAE 00009908
("Chemserve")
Chemserve - Acquisition of remaining 50% of Ondeo Nalco SA from Ondeo Nalco
Company of the US
1. Introduction
Shareholders are advised that, subject to the conditions precedent referred to
in paragraph 4 below, an agreement in principle has been concluded between
Chemserve and Ondeo Nalco Company of the US ("Nalco"), in terms of which
Chemserve will acquire from Nalco the 50% interest held by Nalco in Ondeo Nalco
SA (Proprietary) Limited ("ONSA") for a consideration of $14m (R115m at the
current exchange rate).
2. The Acquisition
ONSA is a 50/50 joint venture between Nalco and Chemserve. Nalco has offered
its 50% interest in ONSA to Chemserve in terms of an existing shareholders
agreement. This is in line with the 2003/2004 action plan of SUEZ, Nalco"s
holding company, the objectives of which are to reduce its exposure in emerging
countries and to strengthen its financial soundness.
ONSA matches the strategic vision of Chemserve through its specialised
activities of manufacturing and selling water treatment products and equipment
to the potable water industry and the process and mining industries. It has
achieved significant market share in southern Africa by virtue of its excellent
facilities, people and world class Nalco products and technology. The key terms
for the extension of Nalco"s Technical Assistance and Licence Agreement with
ONSA have been agreed, in terms of which it will continue to provide ONSA with
water treatment products and technology up to at least 31 December 2012.
The effective date of the acquisition is expected to be 1 June 2003.
3. Terms of Acquisition
Chemserve will purchase from Nalco all its shares in ONSA free of any liens and
encumbrances. The purchase consideration will be payable in cash to Nalco on or
soon after the effective date.
4. Conditions Precedent
The acquisition is subject to the fulfilment of the following conditions
precedent:
* the necessary regulatory approval being obtained from the South Africa
Reserve Bank;
* approval by the Competition Authorities;
* the successful conclusion of an Acquisition Agreement and Technical
Assistance and Licence Agreement; and
* approval by the boards of directors of Nalco, Chemserve and AECI Limited.
5. Financial Effects
The table below sets out the pro-forma financial effects of the acquisition
based on published audited year end results for Chemserve for the year ended 31
December 2002.
The earnings figures in the `after" column assume the acquisition was effected
on 01 January 2002.
The net asset value figures in the `after" column assume the acquisition was
effected on 31 December 2002.
Notes Before the After the Percentage
Acquisition Acquisition change
(cents) (cents)
Headline earnings 235,2 238,1 1,2%
per share
Earnings per share 1 182,2 162,6 (10,8%)
Net asset value per 844,0 844,0 -
share
Intangible asset 2 173,2 282,6 63,2%
value per share
Notes:
1. The earnings per share decrease reflects the headline earnings per share
increase less the amortisation of the additional goodwill arising from this
acquisition.
2. Intangible asset value increases due to a substantial portion of the
acquisition cost being attributable to goodwill.
A further announcement will be made in due course.
Sponsor and Corporate Advisor
PricewaterhouseCoopers Corporate Finance (Proprietary) Limited
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