| Fri 2 Sep 2005, 11:26 | | Beget - Acquisition |
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Beget - Acquisition
BEGET HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2002/011635/06)
Share code: BEE ISIN: ZAE000044111
(`Beget`)
ACQUISITION BY BEGET OF REMAINING MINORITY INTEREST IN BEGET INTERACTIVE
(PROPRIETARY) LIMITED, TOGETHER WITH CERTAIN INTELLECTUAL PROPERTY RIGHTS
1. Introduction
Beget has agreed to acquire the 34 ordinary shares (`sale shares`)
comprising the 34% interest held in Beget Interactive (Proprietary) Limited
(`Beget Interactive`) by Excellular Systems (Proprietary) Limited (`the
Seller`), together with certain intellectual property rights (`the IP`)
relating to products sold and distributed by Beget Interactive. On
implementation of the acquisition Beget will own 100% of Beget Interactive.
2. Terms of the Acquisition
The effective date of the acquisition will be 31 July 2005, subject to
fulfilment of the condition set out below. The closing date of the
acquisition shall be the first business day following the date of
fulfilment of the condition.
The consideration to be paid by Beget to the Seller for the sale shares and
the IP shall comprise R5,13 million in cash (`the cash consideration`) and
36 million shares in Beget (`the consideration shares`), the consideration
shares to be issued at 20 cents per share.
The cash consideration will be settled by payment to the Seller of R1,5
million on or before 31 August 2005 and, after closing, by payment of 12
equal consecutive monthly instalments of R302,500.00.
The consideration shares shall be issued and allotted to the Seller within
10 days of the closing date.
The IP consists of all intellectual property rights owned by the Seller and
Mr H A P Dormehl, a director of the Seller, in respect of or relating to
any products presently manufactured, assembled, sold or otherwise exploited
by or on behalf of Beget Interactive, and includes any future developments
in respect of such products. In addition, the IP includes all intellectual
property rights arising in respect of products that may be developed by the
Seller and/or Mr Dormehl and in respect of which Beget chooses to exercise
the right of first refusal granted to it in terms of the Product Agreement
entered into between Beget and the Seller as of 17 August 2005 (`the
Product Agreement`).
3. Rationale
Beget Interactive, the operating company of Beget, is a value added
reseller and distributor of business information solutions. The board of
directors of Beget considers it strategically sound to acquire the Seller`s
minority interest in Beget Interactive. As a consequence of the
acquisition, no share of future profits will be payable by Beget
Interactive to a minority shareholder, all such profits to flow to Beget,
and it is expected that over time there will be a significant return on the
consideration paid for the acquisition.
It is considered that the acquisition of the IP, in respect of both
existing and future products, will enhance the value of Beget Interactive
as it will consequently enjoy more complete control over its product
offering. Furthermore, the arrangements that will result from the
acquisition, coupled with the Product Agreement, should result in more
efficient and effective arrangements between Beget and the Seller as
regards Beget Interactive`s current and future product offerings.
4. Condition
The acquisition is subject to the condition that all relevant regulatory
approvals required to conclude or implement the acquisition are obtained.
5. Financial Effects of the Acquisition
The pro forma financial effects of the acquisition on the historical
earnings, headline earnings, diluted headline earnings, net asset value and
tangible net asset value per Beget share are set out below. The financial
effects have been calculated utilising Beget`s published audited results
for the financial year ended 31 December 2004 (`year end results`), on the
assumption that the acquisition occurred, for earnings, headline earnings
and diluted headline earnings per share purposes on 1 January 2004 and for
net asset value and tangible net asset value per share purposes on 31
December 2004. These financial effects are prepared for illustrative
purposes only and may not fairly represent Beget`s financial position and
results of its operations post the acquisition.
The pro forma financial effects are the responsibility of the board of
directors of Beget.
Pro forma before Pro forma % change
the acquisition after the
(cents) (1) acquisition
(cents)
Earnings per share (0.72) (0.75) (2) (4.1)
Headline earnings per
share (0.53) (0.58) (2) (8.8)
Diluted headline earnings
per share (0.51) (0.56) (2) (9.2)
Net asset value per share (0.26) 1.57 (3) 710.0
Net tangible asset value
per share (0.88) (2.08) (3) (138.2)
(1). The `pro forma before the acquisition` column reflects Beget`s earnings per
share, headline earnings per share, diluted headline earnings per share,
net asset value per share and tangible net asset value per share as
published in the year end results.
(2). The `pro forma after the acquisition` column reflects Begets earnings per
share, headline earnings per share and diluted headline earnings per share
based on the following assumptions:
- interest would have been incurred at a nominal annual rate of 10.5 %
on the cash consideration of R5.13 million;
- taxation at a rate of 30%;
- no adjustment for outside shareholders share of Beget`s losses;
- no adjustment for the amortisation of goodwill arising from the
acquisition;
- for purposes of earnings per share and headline earnings per share
Beget had weighted shares in issue of 395 512 927; and
- for purposes of diluted headline earnings per share Beget had weighted
shares in issue of 408 793 798.
(3). The `pro forma after the acquisition` column reflects Begets net asset
value and net tangible asset value per share based on the following
assumptions:
- the issue of 36 million shares at 20 cents per share
- an adjustment for outside shareholders interest of R33;
398 158 228 shares in issue;
- for net tangible asset value per share, the raising of goodwill of R12
329 967.
Circular to Shareholders
The acquisition is a Category 2 transaction under the Listings Requirements of
the JSE Limited. Accordingly, as required, a circular for information purposes
will be posted to Beget shareholders in due course.
Rosebank
2 September 2005
SPONSOR AND LEGAL ADVISOR
Java Capital (Proprietary) Limited
REPORTING ACCOUNTANTS
PKF (Pta) Inc.
Accountants and business advisers
Date: 02/09/2005 11:21:53 AM
Produced by the JSE SENS Department
