| Tue 18 Jan 2005, 8:59 | | ASTRAPAK LIMITED - ACQUISITION OF HILFORT PLASTICS |
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ASTRAPAK LIMITED - ACQUISITION OF HILFORT PLASTICS (PROPRIETARY)
LIMITED (`HILFORT
ASTRAPAK LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1995/009169/06)
(Share code: APK)
(ISIN: ZAE000030938)
(`Astrapak`)
ACQUISITION OF HILFORT PLASTICS (PROPRIETARY) LIMITED (`HILFORT`)
1. INTRODUCTION
Pursuant to the further cautionary announcement released on SENS
on 20 December 2004, linked unitholders are advised that
Astrapak`s board of directors (`the board`) and the present
shareholders of Hilfort have reached an agreement whereby
Astrapak, via its wholly owned subsidiary, Astrapak Western Cape
(Proprietary) Limited, will acquire 100% of the issued share
capital of Hilfort for a consideration of no more than R85
million with effect from 1 March 2005 (`the acquisition`).
The sellers are the David Balkwill Family Trust, the Peter
McGivern Family Trust, the Michael McGivern Family Trust, the
Dermot McGivern Family Trust, the Eily Balkwill Family Trust,
the Jean McGivern Family Trust, the Patrick McGivern Family
Trust and the Frances McGivern Family Trust (collectively `the
vendors`).
2. DETAILS OF THE ACQUISITION
2.1. Nature of the business of Hilfort
Hilfort is an owner-managed family business and employs
240 people. The business is operated principally from a
facility in Cape Town and a smaller manufacturing
facility in Bloemfontein which services customers in
Gauteng, Kwazulu-Natal, Northern Cape and surrounding
areas.
Hilfort`s core business is the design and manufacture of
high-quality plastic containers and closures, mainly for
the beverage, dairy and wine related industries. Over
the years Hilfort earned a reputation for being
innovative, particularly in the PET bottle blowing
industry. Hilfort further specialises in the in-house
design and manufacture of moulds to meet its customers`
unique requirements.
Hilfort`s PET mineral water bottle recently received the
top award for packaging in the South African Gold Pack
Awards.
2.2. Rationale for the acquisition
In line with the strategy of Astrapak of organic and
acquisitive growth through investing in companies with
specialised technology operating in dynamic markets, the
board considers the acquisition to be appropriate for
the following reasons:
- Hilfort is a highly efficient, well managed and technically
competent plastic blow-moulding manufacturer, being one of the
leaders in its chosen market segment;
- Hilfort operates mainly in the beverage and dairy industries
- both markets with higher than average growth prospects and
markets in which Astrapak wishes to increase its exposure;
- a substantial portion of Hilfort`s revenue is derived from
its PET business, which is recognised to be the plastic packaging
medium with the highest growth rate world-wide;
- the acquisition of Hilfort brings a national blow-moulding
presence to Astrapak`s Rigid Division, adding manufacturing
facilities in both Cape Town and Bloemfontein to those already
established in Johannesburg, Pretoria and Durban;
- the acquisition is of strategic importance and provides a
sound platform for growth; and
- Hilfort will benefit from Astrapak`s management expertise,
capital base and overall purchasing power.
The acquisition is therefore of strategic importance to
Astrapak and its Rigid division, in particular, and will
allow Astrapak to offer customers a national service.
2.3. Terms of the acquisition
2.3.1. Effective Date
Subject to fulfilment of the conditions
precedent, the acquisition will be effective
on 1 March 2005.
2.3.2. Purchase consideration
The purchase consideration payable is the
amount of Hilfort`s audited profit after tax
(`PAT`) for the 12-month period ending on 28
February 2005, multiplied by 6.13, provided,
however, that the purchase consideration will
be capped and will not exceed a maximum sum of
R 85 million.
The purchase consideration will be paid as
follows:
- on fulfilment of the conditions precedent and against
delivery of the sale equity, Astrapak will pay the vendors
amount equal to the audited net asset value (`NAV`) of Hil
at 28 February 2005, provided, however, that the NAV shall
less than R 50,427 million and shall not exceed R 57,151 m
The level of NAV to be delivered to Astrapak is warranted
vendors and will be determined by reference to the final p
consideration;
- the remaining portion of the purchase consideration will be
the subject of a performance warranty relating to the 12-month
period ending 28 February 2006 (`the warranty period`) and will
only be paid upon delivery to, and acceptance thereof by Astrapak,
of Hilfort`s audited financial results for the warranty period. In
terms of the sale agreement the vendors warrant that the audited
PAT for the warranty period will be equal to Hilfort`s actual
audited PAT for the 12-month period ending 28 February 2005 or
R10,995 million, whichever is the greater, but not exceeding R
13,866 million. If this warranty is not achieved, the remaining
portion of the purchase consideration payable shall be reduced by
deducting from it the difference between the warranted PAT, as
determined, and the actual audited PAT achieved, multiplied by
6.13, provided that the purchase consideration shall not be
reduced below the NAV delivered to Astrapak as at 28 February
2005.
Certain warranties and indemnities usual in a
transaction of this nature have been furnished
by the vendors to Astrapak. No obligation in
respect of the warranties or indemnities will
endure beyond 28 February 2007.
2.3.3. Funding of the acquisition
The purchase consideration will be settled out
of Astrapak`s cash resources.
2.3.4. Conditions precedent
The acquisition is subject to the fulfilment
of various conditions precedent which are
customary in transactions of this nature,
approval of the Competition authorities and
other applicable statutory or regulatory
approvals.
3. FINANCIAL EFFECTS
The pro forma financial effects of the acquisition set out below
are based on the following assumptions:
- the earnings and headline earnings per linked unit reflected
in the `Before` column were extracted from the circular to linked
unitholders dated 13 December 2004. The circular dealt with the
acquisition by Royal Bafokeng Finance (Pty) Ltd of a 20% voting
interest in Astrapak and reflected the financial effect of the
transaction using the unaudited reported results for the six
months ended 31 August 2004;
- the Net Asset Value and Tangible Net Asset Value per linked
unit reflected in the `Before` column were extracted from the
circular to linked unitholders dated 13 December 2004. The
circular dealt with the acquisition by Royal Bafokeng Finance
(Pty) Ltd of a 20% voting interest in Astrapak and reflected the
financial effects of the transaction using the unaudited reported
results for the six months ended 31 August 2004;
- the effect on Net Asset Value and Tangible Net Asset Value
per linked unit reflected in the `After` column assumes that the
acquisition was effective from 31 August 2004;
- the effect on earnings and headline earnings per linked unit
reflected in the `After` column assumes that the acquisition was
effective from 1 March 2004
-
-
Actual Pro Increase / Increase /
Before forma (Decrease) (Decrease)
After (%)
Earnings per linked 50.9 54.2 3.3 6.4%
unit (cents)
Headline earnings per 49.2 52.5 3.3 6.6%
linked unit (cents)
Fully diluted earnings 46.1 49.1 3.0 6.4%
per linked unit (cents)
Fully diluted headline
earnings per linked 44.5 47.5 3.0 6.6%
unit (cents)
Net asset value per 471.6 471.6 - -
linked unit (cents)
Tangible net asset 443.1 420.1 (23.0) (5.2%)
value per linked unit
(cents)
Number of linked units 135 131 135 131 - -
in issue (`000)
Weighted average number
of linked units in 121 243 121 243 - -
issue (`000)
Weighted average number
of fully diluted linked 133 908 133 908 - -
units in issue (`000)
Notes to the financial effects:
1. The financial effects are based on the assumption that the
audited PAT achieved by Hilfort for the 12-month period ending 28
February 2005 will be R13,866 million, resulting in the maximum
purchase consideration of R 85 million being payable to vendors.
Forecasts to end of February 2005 indicate that this amount will
be achieved and in all likelihood exceeded.
2. Given the purchase consideration in 1 above, the NAV
delivered to Astrapak as at 28 February 2005 would therefore be
R57,151 million, resulting in goodwill of R27,849 million being
paid.
3. The purchase consideration will be funded in cash and it has
been assumed that the cost of such funding would be equal to the
prime rate of interest.
4. The financial effects do not take into consideration any
synergistic benefits or benefits arising from the improvement in
overall purchasing power.
Sandton
17 January 2005
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
CORPORATE FINANCE
Legal Advisor
PAUL BOTHA & ASSOCIATES.
Date: 18/01/2005 08:30:05 AM
Produced by the JSE SENS Department
