| Thu 21 Sep 2006, 15:30 | | Gijima AST Group Limited - Acquisition by Gijima A |
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GIJ
GIJ
Gijima AST Group Limited - Acquisition by Gijima AST Group of Absa Bank
Limited"s 30% shareholding in AST distributed technology Services (Pty)
Limited and withdrawal of cautionary announcement
GIJIMA AST GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/021790/06)
Share code: GIJ ISIN: ZAE000064606
("Gijima AST Group")
Acquisition by Gijima AST Group of Absa Bank Limited"s 30% shareholding in
AST distributed technology Services (Pty) Limited and withdrawal of
cautionary announcement
INTRODUCTION
Further to the cautionary announcement dated 8 September 2006, Gijima AST
Group is pleased to announce that GijimaAST Holdings (Pty) Limited
("GijimaAST"), a 100% owned subsidiary of Gijima AST Group, has concluded
an agreement with Absa Bank Limited ("Absa") to purchase its 600 shares in
AST Distributed Technology Services (Pty) Limited ("DTS") ("the DTS
shares"), representing 30% of the issued share capital of DTS ("the
acquisition"). Subsequent to the acquisition, DTS will become a wholly-
owned subsidiary of GijimaAST.
DETAILS OF THE ACQUISITION
Rationale
DTS provides flexible and diversified offerings to a variety of clients,
which include integrated server support, remote desk-side support, software
license management, LAN and WAN support, break-fix warranty, asset
management, project services, install, move, add, change and decommission
of hardware and software, thin client solutions, enterprise Microsoft
services and ATM device support services.
Gijima AST Group believes the acquisition will allow it to better integrate
DTS into its group structure and product offering in line with the ongoing
trend towards convergence within the ICT industry. This will improve the
long term financial performance of DTS. Gijima AST Group is confident that
its strong relationship with Absa will continue into the future. Absa will
remain a key client of DTS and the recently concluded five year service
agreement between DTS and Absa, effective December 2006, will not change
pursuant to the acquisition.
Terms of the acquisition
In terms of the acquisition, GijimaAST will purchase the DTS shares from
Absa with effect from 1 July 2006.
DTS will declare a dividend of R35 979 556 to Absa ("dividend payment") and
thereafter GijimaAST will purchase the DTS shares held by Absa for R44 523
000 ("purchase consideration").
The dividend payment and the purchase consideration will be settled in cash
upon fulfilment of the conditions precedent referred to in 5 below.
Interest on the dividend payment and purchase consideration will be payable
at the Absa overnight call deposit rate from 19 December 2006, in the event
that the conditions precedent are not fulfilled by this date, until payment
of the dividend payment and the purchase consideration.
Financial effects of the acquisition
The table below sets out the unaudited pro forma financial effects of the
acquisition and dividend payment on Gijima AST Group"s unaudited earnings
per ordinary share ("EPS"), headline earnings per ordinary share ("HEPS")
for the six months ended 31 December 2005, as well as Gijima AST Group"s
net asset value per ordinary share ("NAV") and net tangible asset value per
ordinary share ("TNAV") at 31 December 2005. The unaudited pro forma
financial effects are the responsibility of the directors of Gijima AST
Group and are based on financial information of Gijima AST Group. These
unaudited pro forma financial effects have been prepared for illustrative
purposes only and, because of their nature, may not give a true reflection
of the actual financial effects on Gijima AST Group. It has been assumed
for purposes of the unaudited pro forma financial effects that the
acquisition and dividend payment were implemented on 1 July 2005 for income
statement purposes and 31 December 2005 for balance sheet purposes.
Before the After the Change
acquisition acquisition
(cents) (cents)
Earnings per ordinary 1.05 1.23 17%
share
Headline earnings per 1.07 1.25 17%
ordinary share
Net asset value per 27.63 22.05 (20%)
ordinary share
Net tangible asset 16.58 11.00 (34%)
value per ordinary
share
Notes and assumptions:
1. The EPS, HEPS, NAV and TNAV per Gijima AST Group share as set out in
the "Before the acquisition" column of the above table are based upon the
unaudited interim results of Gijima AST Group for the six months ended 31
December 2005.
2. The EPS and HEPS as set out in the "After the acquisition" column of the
above table are based on the financial information of Gijima AST Group for
the six months to 31 December 2005, adjusted for the following:
- interest at a rate of 6.3% has been foregone in respect of the
purchase consideration and the dividend payment;
- the minority interest attributable to the 30% shareholding in DTS has
been reversed; and
- the tax benefit relating to the interest and the STC payable in
respect of the dividend payment have been included. It should be noted that
the STC payable is a once-off cost related to the dividend payment. The STC
payment impacts EPS and HEPS by 0.47 cents per ordinary share.
3. The NAV and TNAV per Gijima AST Group share as set out in the "After the
acquisition" column of the above table are based on the financial
information of Gijima AST Group for the six months to 31 December 2005,
adjusted for the following:
- transaction costs of R2 590 000 have been capitalised to the cost of
the acquisition;
- the excess paid over the minority interest value in the balance sheet
has been taken to equity; and
- the dividend payment and the STC payable thereon have been included.
4. The number of shares and weighted number of shares in issue before and
after the acquisition is 964,666,528.
RELATED PARTY TRANSACTION
Absa is the seller of the DTS shares and also a material shareholder in
DTS. Consequently, the acquisition is classified as a "related party
transaction" in terms of the Listings Requirements of the JSE Limited
("JSE"). Accordingly, Gijima AST Group shareholders are required to vote on
an ordinary resolution to approve the acquisition in a general meeting.
KPMG Services (Pty) Limited has been appointed to advise the board on
whether the terms and conditions of the acquisition are fair and reasonable
to Gijima AST Group shareholders. Their report in this regard will be
included in the circular to Gijima AST Group shareholders referred to in 6
below.
IRREVOCABLE UNDERTAKINGS TO SUPPORT THE ACQUISITION
Gijima AST Group has received a written irrevocable undertaking to vote in
favour of the acquisition from the Guma Group, who owns approximately 36.6%
of the Gijima AST Group shares in issue. Furthermore, Gijima AST Group has
received an irrevocable undertaking from Allan Gray Limited ("Allan Gray")
to recommend to its clients, who own approximately 25.1% of the Gijima AST
Group shares in issue, to vote in favour of the acquisition.
CONDITIONS PRECEDENT
The acquisition has been approved by the board of directors of Gijima AST
Group, the board of directors of DTS and the Investment Committee of Absa.
However, the acquisition is still subject to the fulfilment of the
following conditions precedent:
the approval by the JSE of a circular to be sent to Gijima AST Group
shareholders;
the approval by Gijima AST Group shareholders of the acquisition at a
general meeting of shareholders to be convened for that purpose; and
to the extent that it is required, the obtaining of the approval of the
acquisition by the Competition Authorities as contemplated in the
Competition Act, No 89 of 1998, as amended.
CIRCULAR TO GIJIMA AST GROUP SHAREHOLDERS
A circular containing, inter alia, full details of the acquisition and a
notice of a general meeting of Gijima AST Group shareholders will be sent
to shareholders on or about 3 November 2006.
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
The cautionary announcement dated 8 September 2006 is hereby withdrawn.
Johannesburg
21 September 2006
Merchant bank and sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Reporting accountants
KPMG Inc.
Corporate Law Advisors
Edward Nathan (Proprietary) Limited
Date: 21/09/2006 03:30:05 PM Produced by the JSE SENS Department
