| Thu 21 Sep 2006, 7:02 | | DAWN - Acquisition of the entire issued share capi |
|
DAW
DAW
DAWN - Acquisition of the entire issued share capital of and shareholders
loans in DPI and withdrawal of cautionary announcement
Distribution and Warehousing Network Limited
(Incorporated in the Republic of South Africa)
(Registration number 1984/008265/06)
Share code: DAW, ISIN code: ZAE000018834
("DAWN")
ACQUISITION OF THE ENTIRE ISSUED SHARE CAPITAL OF AND SHAREHOLDERS LOANS IN
DPI HOLDINGS (PTY) LTD ("DPI") AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. Introduction
Shareholders are advised that DAWN has, subject to the principal suspensive
conditions set out below, entered into agreements to acquire the entire
issued share capital of and shareholders loans in DPI ("the interest") from
Everite (Proprietary) Limited ("Everite") on 10 July 2006 and Sasol Chemical
Industries (Pty) Ltd ("SCI") on 12 September 2006 (together referred to as
"the acquisition"). In terms of section 9 of the JSE Limited"s Listing
Requirements, the acquisition is classified as a category 3 transaction.
2. Rationale for the acquisition
Dawn recently increased its shareholding in Incledon (Proprietary) Limited
to 100% from 30,4%, resulting in an effective 50% economic benefit in
Incledon-DPI (Proprietary) Limited ("IDPI") with DPI holding the remaining
50% economic benefit. The acquisition by Dawn of the DPI Group allows Dawn
to consolidate IDPI with the other sales entities in the DPI Group to
enhance the product range and service being offered to its customer base
through a united national marketing strategy and approach.
Furthermore this acquisition also allows Dawn to realign the manufacturing
and trading operations of DPI and to unlock value in the coastal DPI trading
entities.
Dawn will be able to apply a more focused approach in managing the
operations of DPI which will not only be to Dawn"s benefit, but will also
have a positive impact for DPI"s customer base.
The range of products manufactured by DPI will further compliment Dawn"s
current product offering. This will in turn assist DPI to achieve economies
of scale in relation to manufacturing and optimise transportation and
logistical expenses throughout the Dawn group.
Further synergies will be gained from DPI"s representation through its
subsidiaries and joint ventures in sub-Saharan Africa which supports Dawn"s
approach to establish a wider African trading footprint.
The increase in infrastructure spending and positive economic outlook,
together with additional turnaround initiatives to be implemented, will
further enhance the performance of DPI.
3. Description of the business of DPI
The DPI Group of companies (which consist of interests in manufacturing
operations in South Africa, Botswana, Namibia, Tanzania and Mauritius and
trading operations throughout South Africa and sub-Saharan Africa)
manufacture and market PVC and polyethylene pipes and injection moulded
fittings ("plastic pipes and fittings") for various applications including
civil, building, plumbing, industrial, mining and irrigation, in addition to
the marketing of various engineering products. The plastic pipes and
fittings are further complimented by fabricated products in order to provide
the total requirement/solution of the customer.
The plastic pipes manufactured by DPI are used for water mains and
reticulation, sewer effluent control and water purification. All the
products manufactured by DPI in South Africa are manufactured to SABS and
internationally accepted standards.
4. Terms of the acquisition
DAWN has acquired, subject to certain suspensive conditions, the interest
for an aggregate purchase consideration of R95 100 000 in cash. The vendors
are:
* SCI - 60% economic interest; and
* Everite - 40% economic interest.
The aggregate purchase consideration payable in terms of the acquisition
will be settled as follows:
* R 8 000 000 on the effective date; and
* R87 100 000 on 1 July 2008.
The acquisition is subject to warranties and indemnities normal to a
transaction of this nature but carries no profit warranty.
5. Articles of association
Dawn has instructed its legal adviser to confirm that the articles of
association of DPI comply with Schedule 10 of the JSE Limited"s Listing
Requirements and, where they do not comply, to effect such changes thereto
so that they do comply with the said schedule.
6. Pro forma financial effects
The unaudited pro forma financial effects provided below are the
responsibility of the directors of Dawn and are disclosed in order to
provide shareholders with information on the impact of the acquisition on
the annual results for the year ended 30 June 2006.
The unaudited pro forma financial effects have been prepared for
illustrative purposes only and, because of their nature, may not fairly
present the financial position of Dawn, changes in its equity or results of
its operations or cash flows subsequent to the implementation of the
acquisition.
The unaudited pro forma financial effects of the acquisition on the headline
earnings, earnings, net asset value and tangible net asset value per DAWN
share, before and after the acquisition, are set out below:
Notes Before After Change
Per DAWN share (cents) (cents) (%)
Headline earnings 1 75.10 60.05 -20.0
Earnings 1 77.39 62.35 -19.4
Net asset value 2 198.93 198.93 -
Net tangible asset value 2 133.38 135.77 1.8
Notes:
1. The amounts in the "Before" column are based on the headline earnings
and earnings per Dawn share as reported in the annual results of DAWN for
the year ended 30 June 2006. The amounts in the "After" column represent the
headline earnings and earnings that would have accrued per DAWN share for
the year ended 30 June 2006 had the acquisition been effective from 1 July
2005.
2. The amounts in the "Before" column are based on the net asset value and
net tangible asset value per Dawn share as reported in the annual results of
DAWN for the year ended 30 June 2006. The amounts in the "After" column
represent the net asset value and tangible net asset value per Dawn share
had the acquisition been effective from 30 June 2006.
3. A purchase price allocation ("PPA") exercise in terms of IFRS 3:
Business Combinations has not yet been performed. For purposes of the pro
forma financial effects, the difference between the fair value of the
purchase consideration and the book values of the net assets acquired has
been attributed to goodwill. Following the PPA exercise, the values
attributed to the tangible assets and liabilities acquired may differ, which
could affect the pro forma financial effects presented.
4. The purchase consideration will be funded from both internal cash
resources and from external financing.
7. Suspensive conditions
The acquisition is subject to the following principal suspensive conditions
being fulfilled by no later than 30 September 2006 namely:
* The providers of external debt to members of the DPI group agree to
continue such funding for such period and on terms as are acceptable to
DAWN acting reasonably;
* DAWN procures the release of Sasol Limited and Group Five Limited from
respective letters of support in favour of The Standard Bank of South
Africa Limited;
* The receipt of a written unconditional consent from The Standard Bank
of South Africa Limited to the respective vendors entering into the
transactions constituting the acquisition;
8. Withdrawal of cautionary announcement
Shareholders are referred to the cautionary announcements dated 11 July 2006
and 23 August 2006, and are advised that as details of the acquisition have
now been presented in this announcement, caution is no longer required to be
exercised by the shareholders when dealing in the securities of Dawn.
Johannesburg
21 September 2006
Corporate adviser Sponsor
Bishop Corporate Finance Deloitte & Touche Sponsor Services
Legal adviser Competition Law adviser
Werksmans attorneys Webber Wentzel Bowens
Date: 21/09/2006 07:02:06 AM Produced by the JSE SENS Department
