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Value - Acquisition by Value of Countrywide Footwear Carriers (Pty) Ltd
Value Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1997/002203/06)
(Share code VLE ISIN: ZAE000016507)
(`Value`)
ACQUISITION BY VALUE OF COUNTRYWIDE FOOTWEAR CARRIERS (PTY) LTD
Introduction
Investec Bank Limited is authorized to announce that Value has entered into an
agreement, in terms of which it will acquire 100% of the issued shares in
Countrywide Footwear Carriers (Pty) Ltd (`CFC`), a company incorporated in the
Republic of South Africa, from Consolidated Importers and Exporters (Pty) Ltd
(`the vendor`), subject to the fulfillment of the conditions precedent referred
to below.
History and nature of business
CFC was established in 1987 and specializes in the provision of warehousing and
distribution services focused on the footwear, clothing and general merchandise
industries. These services have been geared towards the retail industry where
stock control and delivery of goods are paramount to the success of its
principals. Product is distributed by CFC throughout South Africa, Namibia and
Botswana utilizing its depot infrastructure in Johannesburg, Durban, Cape Town
and Ficksburg.
Rationale
The acquisition of CFC is in line with Value`s strategy of acquiring logistics`
associated businesses that are well managed and provide synergistic
opportunities, which would include the utilization of Value`s resources,
vehicles and infrastructure. In addition, the customer base of CFC will provide
a platform for Value to expand its business services, whilst simultaneously
diversifying the range of products warehoused and distributed.
Salient Terms
Value will purchase 100% of the issued shares in CFC from the vendor for a total
consideration of R22.5 million, payable as follows:
R5 million was paid as a deposit on commencement of the due diligence.
The balance of R17.5 million will be paid in 3 installments as follows:
- R6 million on the effective date
- R6 million within 30 days of the effective date
- R5.5 million within 60 days of the effective date
The purchase consideration will be funded from existing cash resources and
banking facilities.
Conditions Precedent
The CFC acquisition is subject to the following material conditions precedent:
- Competition Commission approval
- The vendor signing a 5 year distribution agreement with CFC by no later
than 30 April 2005
- Snip Trading (Pty) Ltd, a major customer of CFC, signing a 3 year
warehousing and distribution agreement with CFC by no later than 30 April
2005
The vendor has given warranties which are usual in a transaction of this nature.
Effective Date
The effective date of the acquisition will be the first business day subsequent
to Competition Commission approval.
Financial effects of the CFC acquisition
Assuming the acquisition was effective 1 March 2004 and the purchase
consideration was paid by Value, the proforma effects on headline earnings and
tangible net asset value per share as disclosed in Value`s interim report to 31
August 2004, would not have been material. It is anticipated that the results of
CFC will have a positive impact on future earnings of Value.
Categorization of CFC acquisition
The acquisition has been categorized as a category 3 transaction in terms of
section 9.5(a) of the JSE Listings Requirements. In terms of section 9.16, the
acquisition will result in CFC becoming a subsidiary company of Value and
accordingly the articles of association of CFC will be amended to conform to
schedule 10 of the JSE Listings Requirements.
Johannesburg
5 April 2005
Investec Bank Limited Werksmans Inc
Sponsor to Value Group Limited Legal advisor to Value Group Limited
Date: 05/04/2005 04:00:03 PM
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