| Thu 10 Nov 2005, 17:11 | | Steinhoff International Holdings Ltd - Acquisition |
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Steinhoff International Holdings Ltd - Acquisition By Steinhoff Of A Strategic
Interest In Kap International Holdings Limited ("KAP-SA")
Steinhoff International Holdings Ltd
(Incorporated in the Republic of South Africa)
(Registration number 1998/003951/06)
Share code: SHF
ISIN: ZAE000016176
("Steinhoff" or "the Company")
ACQUISITION BY STEINHOFF OF A STRATEGIC INTEREST IN KAP INTERNATIONAL HOLDINGS
LIMITED ("KAP-SA")
INTRODUCTION
Shareholders are advised that agreement has been reached between Steinhoff
Africa Holdings (Proprietary) Limited ("SAF") and KAP Beteiligungs AG ("KAP
Germany") in terms of which SAF, or its nominee, will acquire from KAP Germany
88,76 million shares in KAP-SA ("the acquired shares") ("the acquisition"). The
purchase consideration of R315 985 600, equivalent to 356 cents per KAP- SA
share, represents a discount of 6,3% to the closing market price of KAP-SA"s
shares of 380 cents per share on 4 November 2005, being the date on which the
purchase price was agreed between the parties. The purchase consideration will
be settled in cash against delivery of the shares to SAF by not later than 30
November 2005. The acquired shares represent approximately 21% of KAP-SA"s
issued share capital. SAF"s shareholding, together with the board representation
and other rights (referred to below) that it has obtained as integral terms of
the acquisition, will facilitate SAF equity accounting this investment after its
implementation as an associate.
RELATED PARTIES AND OPINIONS
Mr Claas Daun, an independent non-executive director of Steinhoff, is the
Chairman and ultimate controlling shareholder of each of KAP-SA and KAP Germany.
In addition, Mr Daun is the Chairman and controlling shareholder of Daun & Cie
AG ("Daun & Cie") which holds 44,7% of KAP-SA"s issued shares. Mr Markus Jooste,
the Chief Executive Officer of Steinhoff, is an independent non-executive
director of KAP-SA and a director of a private company ("Privco") which holds 11
181 520 KAP-SA shares (being 2,6% of KAP-SA"s issued shares) ("the Privco
shares").
The acquisition is a related party transaction as defined by the Listings
Requirements of the JSE Limited ("the JSE") and accordingly, EY Corporate
Finance (Proprietary) Limited ("the expert") was appointed as the independent
professional expert to Steinhoff in relation thereto. The consideration amounts
to approximately 1,5% of Steinhoff"s current market capitalisation. The expert
has assessed the terms and conditions of the acquisition and is of the opinion
that such terms and conditions are fair and reasonable to Steinhoff and its
shareholders. A copy of the expert"s written opinion has been lodged with the
Issuer Services Division of the JSE and is available for inspection at the
registered office of Steinhoff: 28 6th Street, Wynberg, Sandton, 2090, for a
period of 28 days from the date of this announcement.
In accordance with Steinhoff"s Corporate Policy and in order to eliminate any
potential future conflicts of interest between the group and the private
interests of Steinhoff directors, Privco agreed to dispose of the Privco shares
through the market in an orderly fashion.
OTHER TERMS OF THE ACQUISITION
Further salient terms of the acquisition include:
- SAF holding a pre-emptive right in respect of Daun & Cie"s entire interest in
KAP-SA, except for 15 million shares which it could dispose of free of this
restriction. In considering the exercise of this pre-emptive right, due
cognisance will, at the time, be taken of KAP-SA"s long-term objective to
increase the free-float and tradability of the share. In addition, Daun & Cie
has agreed not to sell, without the prior written consent of SAF, during a
period of three years from 30 November 2005, more than 62 million of its 189,2
million (44,7%) shares in KAP-SA; and
- SAF has been granted the right to appoint two directors to the Board of KAP-
SA. It is envisaged that Markus Jooste and Danie van der Merwe will be the
appointed nominees of SAF to the board of KAP-SA, Danie van der Merwe as a new
appointment, with Markus Jooste to remain on as a non-executive director in the
capacity as the second representative of SAF. In addition, Jan van der Merwe,
the Chief Financial Officer of Steinhoff, will be appointed to the Audit
Committee of KAP-SA.
STRATEGIC RATIONALE
Steinhoff is a diversified industrial company, and, due to the integrated
composition of its activities in southern Africa, has substantial raw material
interests. These raw material interests have the potential to unlock significant
synergies with certain of KAP-SA"s operations, notably the Feltex automotive,
leather, foam and trim divisions, which synergies, when realised, will be to the
benefit of both companies and their respective shareholders.
The technology and processes which Steinhoff holds through its Pritex subsidiary
in the United Kingdom and in South Africa could also be exploited jointly to
benefit both groups. KAP-SA"s processes and technology applied in respect of its
Automotive division can, with relative ease, be adapted and applied in SAF"s
upholstered furniture manufacturing processes. This is particularly relevant in
respect of Just-In-Time inventory controls and working capital management. In
addition, KAP-SA, with its access to, and sourcing capabilities in respect of
large quantities of hides and processed leather, could become an alternative
supplier of leather to SAF. This will enhance SAF"s sourcing flexibility of its
local leather raw material requirements.
Furthermore, the acquisition opens up the potential for:
- incremental business for SAF"s raw material division with KAP"s existing
customer base;
- exchange of technology and expertise between KAP"s leather-based activities in
South Africa and Steinhoff"s leather joint venture in India;
- joint sourcing of chemicals and other raw materials which should result in
lower input costs.
FINANCIAL EFFECTS
Although the acquisition is expected to have a beneficial impact on Steinhoff,
the actual effects thereof, due to its relatively small size, on Steinhoff"s
earnings per share, headline earnings per share and net asset value per share
will be immaterial.
Wynberg
Sandton
11 November 2005
Sponsor
PSG Capital
Independent Adviser to Steinhoff
Ernst & Young
Date: 10/11/2005 05:11:44 PM Produced by the JSE SENS Department
