| Thu 14 Dec 2006, 15:50 | | SHF - Steinhoff - Proposed Merger Of Steinhoff Afr |
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SHF
SHF
SHF - Steinhoff - Proposed Merger Of Steinhoff Africa And Amaps
STEINHOFF INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration Number 1998/003951/06)
Share code: SHF & ISIN: ZAE000016176
("Steinhoff")
PROPOSED MERGER OF THE SOUTH AFRICAN FURNITURE MANUFACTURING INTERESTS OF
STEINHOFF AFRICA HOLDINGS (PROPRIETARY) LIMITED ("Steinhoff Africa") WITH
THE BUSINESS OF AMALGAMATED APPLIANCE HOLDINGS LIMITED ("Amap") AND
INTRODUCTION OF BLACK ECONOMIC EMPOWERMENT ("BEE") AS WELL AS MANAGEMENT
INVESTMENT INTO AMAP
1. BACKGROUND
1.1 Steinhoff currently holds, indirectly via Steinhoff Africa, 26,7%
of the issued ordinary shares of Amap.
1.2 An agreement in principle has been entered into between Steinhoff
Africa and Amap ("the agreement") to merge the furniture
manufacturing interests of Steinhoff Africa ("the Steinfurn
business") with the business of Amap ("the merger") whilst
simultaneously introducing BEE and management investors into the
merged business.
1.3 Amap has further entered into separate negotiations with a
leading international white goods company regarding the potential
acquisition of its southern African interests.
2. THE MERGER
2.1 In terms of the agreement, Steinhoff Africa, subject to the
conditions precedent set out in 2.3, will dispose of the
Steinfurn business to Amap for a consideration of R1 152 million
("the consideration"), effectively in exchange for the issue of
ordinary shares in AMAP at 491 cents per share and an appropriate
debt instrument. The merger values for Amap and Steinfurn have
been calculated on a relative basis wherein similar ratings and
valuation metrics were applied to both Amap and Steinfurn.
2.2 Steinhoff Africa`s shareholding in the enlarged Amap will be
approximately 30% after the introduction of BEE and management
investors, who will hold a meaningful interest in the enlarged
Amap.
3. STRATEGIC RATIONALE FOR STEINHOFF
By merging the Steinfurn business with Amap, the combined
business` growth prospects will be enhanced considerably as a
result of the synergies, critical mass considerations and a
broader spread of complementary products on offer. As a result
of the ownership structure of the merged entity that will include
meaningful BEE, it is also envisaged that increased support from
a procurement point of view will be forthcoming from Amap`s
customer bases. Accordingly, Amap, as reconstituted after the
merger, will be a sizeable, focused household goods supplier,
which, in turn, stands to benefit all Amap stakeholders,
including Steinhoff Africa as a minority shareholder.
4. RATIONALE FOR THE MERGER AND PROSPECTS OF THE MERGED BUSINESS
The merger will create a significant local household goods supplier
with a complementary product offering ranging from consumer
electronics and small domestic appliances to household goods ,
furniture and white goods. Substantial benefits arising from the
synergies and scale are expected to be derived from the combined
sourcing, warehousing, distribution and logistics activities, as well
as shared infrastructure, all of which are expected to favourably
impact on Amap`s future earnings and headline earnings per share. In
addition, the merger will facilitate the combination of complementary
management skills and business acumen and will enhance, reciprocally,
management depth and succession planning, as well as facilitating
meaningful BEE participation.
5. CONDITIONS PRECEDENT
The merger is subject to fulfilment of the following conditions
precedent:
5.1 the approval of the merger by Amap shareholders, other than
Steinhoff Africa, in general meeting;
5.2 the JSE Limited ("the JSE") granting a listing of the Amap
consideration shares;
5.3 the approval of the merger by the Competition Authorities, to the
extent required; and
5.4 The merger consideration constitutes approximately 4,2% of
Steinhoff`s market capitalisation and, consequently, neither
Steinhoff shareholder approval nor a circular to Steinhoff
shareholders is required.
5.5 In respect of Amap, the merger constitutes both a category 1 and
a related party transaction in terms of the JSE Listings
Requirements and, consequently, Amap shareholder approval, other
than Steinhoff Africa, and a circular to Amap shareholders,
containing revised Listing particulars, is required. In
addition, a "fair and reasonable" opinion to Amap shareholders is
required and Bridge Capital Advisors (Pty) Ltd has been appointed
in this regard. Their opinion will be included in the relevant
circular to Amap shareholders.
Johannesburg
14 December 2006
Sponsor
PSG Capital
Date: 14/12/2006 15:50:06 Produced by the JSE SENS Department.
