| Fri 8 Aug 2003, 14:40 | | Iliad Africa Limited - Iliad Acquires Corpbuild |
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ILA
Iliad Africa Limited - Iliad Acquires Corpbuild
Iliad Africa Limited
(Incorporated in the Republic of South Africa)
(Registration number 1997/011938/06)
Share code: ILA ISIN: ZAE000015038
("Iliad" or "the company")
ILIAD ACQUIRES CORPBUILD
FOURWAYS - Listed in the Construction and Building Materials sector of the JSE
Securities Exchange"s lists, Iliad Africa Limited today announced that it is
buying the assets and liabilities of building materials specialist, Corpbuild as
a going concern from Corpcapital Limited creating a business with turnover in
the region of R2 billion.
Iliad has not had to deviate from its strategic intent in making this
substantial acquisition. Corpbuild operates in the same market segments, but
there is no duplication or overlap. The acquisition provides the group with
substantially expanded geographic coverage in the building materials division
and critical mass in the ironmongery division.
"Meeting our acquisition criteria, Corpbuild"s core business is directly related
to the existing activities of Iliad. Owner-managed, the business enjoys a proven
track record underpinned by trading excellence and established supplier and
customer relationships," explains Iliad Africa CEO, Ralph Patmore.
Iliad does not foresee resistance from other industry players to the acquisition
as the market for materials is in the region of R23 billion per annum and the
group"s turnover will only represent
8 to 9% of the market. Post-acquisition, the number of building material outlets
rises from three to nineteen, whereas the number of ironmongery and hardware
stores swells by five stores to thirteen.
"Concluded at a P/E multiple equivalent to that of Iliad Africa, the transaction
is earnings neutral. However, operational advantages include the increased
buying power that the enlarged business will enjoy. This purchasing advantage is
significant in the sense that the bulk of the group"s future revenue
contribution will be generated by the general building materials division,
superseding the Ceramic Tiles and Sanitaryware business.
"Adopting the best business practises of both enterprises, and sharing in one
another"s industry insights, management is confident that additional operational
efficiencies will follow," says Patmore.
The purchase consideration of R254 million will be settled in a combination of
cash and shares. The proceeds of the R125 million cash component and the
supplementary 46 million ordinary shares will be distributed to Corpcapital
shareholders.
The flexibility lies in the structuring of the R125 million cash portion. The
group has taken the decision to raise R50 million transaction debt and to issue
25 million shares to the institutions. This will double Iliad"s inferred market
valuation to over R450 million. The company will as a result improve its
institutional base and create liquidity in the share. Futhermore, the group"s
debt to equity ratio will be around 25%, which places the group in a strong
position to make further acquisitions in the future.
"Iliad Africa now has the potential to acquire other businesses off a bigger
capital base, and should the share re-rate, allows the company to leverage its
paper. In a highly fragmented market, there is much scope to exploit this
flexibility in enlarging our geographic footprint further through selective
acquisitions of profitable businesses," Patmore concludes.
Effective from 1 July 2003, the transaction requires the approval of the JSE
Securities Exchange as well as the Competitions Board. The JSE should
communicate its decision by end August, with the Competition Board expected to
reach finality on the matter by late October.
For the period ended 30 June 2003, the group reported a 12% increase in turnover
to R379 million. Iliad Africa posted attributable profits of R20,7 million,
representing a 24% increase. Headline earnings per share increased 27% to 30.5
cents.
END
For more information, please contact:
Mr Ralph Patmore
Chief Executive Officer
ILIAD AFRICA LIMITED
Tel: (011) 467-2891
Date: 08/08/2003 02:26:25 PM Produced by the JSE SENS Department
