| Fri 24 Feb 2006, 14:24 | | Beget - Update of acquisition by Beget of remainin |
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BEE
BEE
Beget - Update of acquisition by Beget of remaining minority interest
BEGET HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2002/011635/06)
Share code: BEE & ISIN: ZAE000044111
("Beget")
UPDATE IN RESPECT OF ACQUISITION BY BEGET OF REMAINING MINORITY INTEREST IN
BEGET INTERACTIVE (PROPRIETARY) LIMITED, TOGETHER WITH CERTAIN INTELLECTUAL
PROPERTY RIGHTS
1. Introduction
As originally announced on 2 September 2005, on SENS, and on 5 September 2005,
in the press, 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 terms of the acquisition were amended by way of an addendum entered into
between Beget and the Seller on 18 January 2006.
The total consideration to be paid by Beget to the Seller for the sale shares
and the IP comprises R5,425 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.
As regards the settlement of the cash consideration, an amount of R1,5 million
was paid to the Seller by Beget between 1 September and 16 September 2005, an
amount of R450 000 was paid to the Seller by Beget on 31 January 2006, an amount
of R450 000 will be paid to the Seller by Beget on 28 February 2006 and the
balance of the cash consideration shall be paid in ten equal consecutive monthly
instalments of R302 500, the first to be paid on or before 31 March 2006 and the
balance on the last day of each calendar month thereafter.
The consideration shares shall be issued and allotted to the Seller within 10
days calculated from 31 March 2006.
The effective date of the acquisition is 30 September 2005 and the acquisition
will be implemented on the first business day following the fulfilment of the
conditions referred to below.
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. Related party transaction
As the Seller is a material shareholder in Beget Interactive, a subsidiary of
Beget and the subject of the acquisition, the Seller is a related party in
respect of the acquisitions as defined in the Listings Requirements of the JSE.
The board of Beget has appointed the independent expert to analyse the terms of
the acquisition and to prepare a report on whether or not these are fair and
reasonable insofar as shareholders are concerned. The report, which will be
included in the circular referred to below, concludes that the terms are fair
and reasonable.
5. Conditions
As the acquisition is a related party transaction, it is conditional on the
shareholders approving thereof by way of ordinary resolution and further, on the
approval of the JSE being obtained in respect of the listing of the
consideration shares.
6. Financial Effects of the Acquisition
The pro forma financial effects of the acquisition on the historical earnings,
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 unaudited interim results for the six months ended 30 June 2005
("interim results"), on the assumption that the acquisition occurred, for
earnings and headline earnings per share purposes on 1 January 2005 and for net
asset value and tangible net asset value per share purposes on 30 June 2005.
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 after % change
the acquisition the acquisition
(cents) (1) (cents)
Earnings per share 0.03 (0.04) (2) (221.19)
Headline earnings per 0.12 0.05 (2) (60.02)
share
Net asset value per 0.07 1.65 (3) 2436.73
share
Net tangible asset (0.42) (1.75) (3) (315.30)
value per share
(1) The "pro forma before the acquisition" column reflects Beget"s earnings per
share, headline earnings per share, net asset value per share and tangible net
asset value per share as per the interim results.
(2) The "pro forma after the acquisition" column reflects Begets earnings per
share and headline earnings per share based on the following assumptions:
- interest would have been incurred at a nominal annual rate of 10.5 % on the
R2,4 million of the cash consideration paid up to and including 28 February
2006;
- no tax is due as a result of an assessed loss brought forward;
- no adjustment has been made for outside shareholders share of Beget
Interactive"s profits due to prior losses;
- for purposes of earnings and headline earnings per share Beget had weighted
shares in issue of 404 124 669; and
(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
- costs of R403 170 have been written off share premium
- 427 155 240 shares in issue after the acquisition;
- for net tangible asset value per share, the raising of R12 624 967 in respect
of intellectual property and intangible assets.
7. Circular to Shareholders
As the acquisition is a category 2 related party transaction in terms of the
Listings Requirements of the JSE, a circular containing details of the
acquisition and incorporating a notice of general meeting of shareholders, will
be posted to shareholders shortly.
Rosebank
24 February 2006
CORPORATE ADVISOR AND SPONSOR
Java Capital (Proprietary) Limited
REPORTING ACCOUNTANTS
PKF (Pta) Inc.
Accountants and business advisers
INDEPENDENT EXPERT
Exchange Sponsors (Proprietary) Limited
Date: 24/02/2006 02:24:34 PM Produced by the JSE SENS Department
