| Fri 24 Feb 2006, 11:12 | | Control Instruments- Acquisition of the business o |
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CNL
CNL
Control Instruments- Acquisition of the business of Sagercy & Further
Cautionary
CONTROL INSTRUMENTS GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1964/003987/06)
Share code: CNL & ISIN: ZAE000001665
("Control Instruments" or "the Company")
ACQUISITION OF THE BUSINESS OF SAGERCY AND FURTHER CAUTIONARY
ANNOUNCEMENT
1. INTRODUCTION
Further to the cautionary announcement dated 18 November 2005 and
subsequent cautionary renewal announcements dated, 3 January 2006
and 14 February 2006, Investec Bank Limited is authorised to
announce that Shurlok Engineering (Proprietary) Limited, a wholly
owned subsidiary of Control Instruments, has reached agreement to
acquire the automotive Original Equipment Manufacture ("OEM")
plastics businesses of the Port Elizabeth division of Sagercy
(Proprietary) Limited, Specialised Plastics Engineering
(Proprietary) Limited and Ariston Specialised Plastics (Proprietary)
Limited ("Sagercy"). The total purchase consideration is R100
million.
2. NATURE OF BUSINESS OF SAGERCY
Sagercy is a leading manufacturer and supplier of specialised
plastic products for the automotive industry. It has manufacturing
sites situated in Port Elizabeth and Uitenhage.
Based on unaudited figures for the six months ended 30 June 2005,
Sagercy"s sales were R48.7 million and profit after tax was R6.9
million. As at 30 June 2005, both the net asset value and tangible
net asset value were R16.4 million.
3. RATIONALE FOR THE ACQUISITION
Control Instruments is involved in the supply of products and
components to the OEM automotive industry. Although the bulk of
these products and components are electronic, an increasing
percentage of them comprise plastic components.
Electronics and plastic products for the OEM automotive industry are
two of the fastest growing sectors in the industry and are becoming
increasingly complementary to each other. In addition, plastics have
the potential to offer high local value added content.
Control Instruments uses and manufactures plastic components in a
number of other areas of its businesses.
4. SALIENT TERMS OF THE ACQUISITION
The purchase consideration
The purchase consideration of R100 million will be settled by a
vendor placement with selected institutions of 16.67 million Control
Instruments ordinary shares, with a par value of 5 (five) cents each
at a price of R6.00 per share. The placement has been authorised by
the directors.
Warranties and indemnities
Warranties and indemnities normal in transactions of this nature
have been provided by Sagercy and its major shareholders.
The effective date
The acquisition of the business of Sagercy will be effective from 2
March 2006.
5. UNAUDITED PRO FORMA FINANCIAL EFFECTS OF THE ACQUISITION
The unaudited pro forma financial effects set out below have been
prepared for illustrative purposes only to assist Control
Instruments shareholders to assess the impact of the acquisition on
the earnings per share ("EPS"), headline earnings per share
("HEPS"), net asset value ("NAV") per share and tangible net asset
value ("TNAV") per share of Control Instruments. The unaudited pro
forma financial effects have been prepared for the six months ended
30 June 2005 and are based on unaudited figures for the six months
ended 30 June 2005.
These unaudited pro forma financial effects have been disclosed in
terms of the JSE Limited ("JSE") Listings Requirements and because
of its nature may not fairly present Control Instruments" financial
position, changes in equity, results of operations or cash flows.
The unaudited pro forma financial effects are the responsibility of
the directors of Control Instruments and are provided for
illustrative purposes only.
Before the After the Change
acquisition acquisition %
Cents Cents
EPS 22.0(1) 26.0(2) 18.2
HEPS 22.2(1) 26.1(2) 17.6
NAV per share 152.5(3) 242.0(4) 58.7
TNAV per share 105.2(3) 103.8(4) (1.3)
Notes:
1. The EPS and HEPS, as set out in the "Before the acquisition" column
of the table, are based on the unaudited income statement of Control
Instruments for the six months ended 30 June 2005 and 65 779 951
weighted average number of shares in issue.
2. The EPS and HEPS, as set out in the "After the acquisition" column
of the table, are based on the combined unaudited income statements of
Control Instruments and Sagercy for the six months ended 30 June 2005,
82 446 618 weighted average number of shares in issue and the assumption
that the acquisition became effective on 1 January 2005.
3. The NAV and TNAV per share as set out in the "Before the
acquisition" column of the table are based on the unaudited balance
sheet of Control Instruments at 30 June 2005 and 66 599 758 shares in
issue.
4. The NAV and TNAV per share as set out in the "After the
acquisition" column of the table are based on the combined unaudited
balance sheets of Control Instruments and Sagercy at 30 June 2005, 83
266 425 shares in issue and the assumption that the acquisition became
effective on 30 June 2005.
6. COMPETITION BOARD APPROVAL
Unconditional approval by the relevant Competition Authorities has
been received in respect of the acquisition of the business of
Sagercy by Control Instruments.
7. CONDITIONS PRECEDENT TO THE ACQUISITION
The acquisition is subject to one material suspensive condition,
namely the approval by the JSE of the listing of the shares forming
the subject matter of the vendor placement.
8. CATEGORISATION OF THE ACQUISITION AND CIRCULAR TO SHAREHOLDERS
The acquisition has been categorised as a category 2 transaction in
terms of section 9.5(b) of the JSE Listings Requirements and a
circular containing the details of the acquisition and prepared
based on 2005 audited annual results for Control Instruments and
Sagercy will be posted to Control Instruments shareholders on or
about Friday, 31 March 2006.
9. FURTHER CAUTIONARY ANNOUNCEMENT
Shareholders are referred to the renewal of cautionary announcement
dated 14 February 2006 and are advised that other negotiations are
still taking place which, if successfully concluded, may have a
material effect on the price of Control Instruments" securities.
Accordingly, shareholders are advised to continue exercising caution
when dealing in the Company"s securities until a further
announcement is made.
Cape Town
24 February 2006
Sponsor: INVESTEC BANK
Attorneys: JAN S DE VILLIERS
Electronics And Plastics Match For Control Instruments In R100 Million
Acquisition
Press Release
Control Instruments announced yesterday that it has acquired the
automotive OEM plastics businesses of the Sagercy group for R100
million. Sagercy is a leading local supplier of plastic components for
the automotive OEM industry.
Control Instruments MD, Richard Friedman, said that the acquisition was
in line with the Group"s stated objective to increase the critical mass
of its businesses. He added that although Control Instruments" primary
focus is on electronics and electronic solutions for the automotive and
transportation industries, an increasing number of products designed and
manufactured by the Group have specialised plastic components in them.
Electronics and plastics are two of the fastest growing areas of
components in the automotive and transportation industries. Friedman
said that Control Instruments already has a plastics manufacturing
facility, but the decision facing the Group was whether to invest
significantly in upgrading this facility or to acquire a business that
already has the facilities and experience necessary to grow the Group"s
business rapidly.
He added that there is a great deal of synergy between Control
Instruments and Sagercy, the companies complement each other very well
and operate in the same niches of the automotive OE market with a number
of common customers.
Pro forma figures in the company"s announcement show that the deal is
earnings enhancing and will result in an estimated increase in earnings
per share of four cents to 26 cents per share.
The purchase price will be settled by a vendor placement with selected
institutions of 16.67 million Control Instruments ordinary shares at a
price of R6.00 per share. Competition Board approval has been received
and the deal will be effective from 2 March 2006.
Control Instruments also issued a further cautionary announcement and
indicated that further acquisitions are under consideration.
The share price closed at R6.05 yesterday.
ENDS
Date: 24/02/2006 11:12:12 AM Produced by the JSE SENS Department
