| Thu 14 Dec 2006, 15:51 | | AMA - Amalgamated Appliance Holdings Limited - Pro |
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AMA
AMA
AMA - Amalgamated Appliance Holdings Limited - Proposed acquisition
Amalgamated Appliance Holdings Limited
(Incorporated in the Republic of South Africa)
Registration number 1997/004130/06
Share code: AMA ISIN: ZAE000012647
("AMAP" or "the group")
PROPOSED ACQUISITION OF:
*THE SOUTH AFRICAN FURNITURE MANUFACTURING INTERESTS OF STEINHOFF AFRICA
HOLDINGS LIMITED ("STEINHOFF AFRICA");
*THE SOUTHERN AFRICAN INTERESTS OF A LEADING INTERNATIONAL WHITE GOODS
COMPANY; AND
FURTHER CAUTIONARY ANNOUNCEMENT
1. Introduction
Further to the cautionary announcement dated 25 October 2006, shareholders are
advised that AMAP has concluded an agreement in principle with Steinhoff
Africa, a wholly-owned subsidiary of Steinhoff International Holdings Limited
("Steinhoff"), to acquire Steinhoff Africa`s South African furniture
manufacturing interests ("the Steinfurn business") ("the Steinfurn
acquisition"). The Steinfurn acquisition will involve the participation of
Black Empowerment and management shareholders, resulting in meaningful
interests in AMAP for both, as more fully disclosed below.
Shareholders are further advised that AMAP is at an advanced stage of
discussions with a leading international white goods company to acquire its
southern African interests.
2. Rationale for the acquisitions
The proposed acquisitions are consistent with AMAP`s strategy to create the
leading provider of the full range of branded household durable products in
South Africa. Once concluded, they will result in a group with turnover in
excess of R5 billion, enhanced profitability prospects and the ability to
better serve the needs of South African consumers and retailers. Specific
advantages of the merger will include:
a broad range of complementary products with opportunities for cross-
selling, cross-branding and combined marketing;
substantial synergies and scale benefits in sourcing, logistics and general
administration;
improvement of management depth and succession options as well as sharing of
skills and BEE opportunities across the group;
diversification of risk at all levels;
an unrivalled offering to the retail trade and the consumer in terms of
product offering, brand positioning and customer service; and
a sound operating and financial base for the pursuit of other significant
growth opportunities.
3. Terms of the Steinfurn acquisition
3.1 The acquisition consideration
In terms of the agreement, AMAP, subject to the conditions precedent set out
in 3.2 below, will acquire the Steinfurn business for a consideration of R1
152 million ("the acquisition consideration"), effectively in exchange for the
issue of ordinary shares in AMAP at a price of 491 cents per share and an
appropriate debt instrument. The values for the Steinfurn business and AMAP
have been calculated on a relative basis, using similar valuation metrics. In
this regard, the acquisition consideration has been based on a price: earnings
multiple of approximately 8 times. The combination of shares and the debt
instrument will ensure that this transaction is meaningfully earnings
enhancing for AMAP whilst leaving the group conservatively geared.
It is envisaged that, after the issue of the AMAP shares and the introduction
of the BEE and management shareholders, in respect of which BEE and management
will have meaningful interest, Steinhoff Africa`s minority shareholding in the
enlarged AMAP will be approximately 30%.
3.2 Conditions precedent
The Steinfurn acquisition remains subject to the necessary regulatory
approvals, including but not limited to approval by the Competition
authorities and by the AMAP shareholders, other than Steinhoff Africa.
3.3 JSE Listings Requirements
Steinhoff, through Steinhoff Africa, currently holds 26.7% of AMAP`s issued
ordinary share capital, therefore, the Steinfurn acquisition represents a
category 1 related party acquisition for AMAP from a JSE Limited Listings
Requirements` perspective. In this regard, Bridge Capital Advisors (Pty)
Limited ("Bridge Capital") has been appointed as the independent professional
expert to provide AMAP shareholders with an opinion on the fairness and
reasonableness of the Steinfurn acquisition.
Details of the Steinfurn acquisition will be finalised before 31 January 2007
and encapsulated in comprehensive sale agreements, following which a further
announcement will be published, which will include, inter alia, Bridge
Capital`s opinion and the pro forma financial effects of the Steinfurn
acquisition.
4. Further cautionary announcement
Until such time as the financial effects of the Steinfurn acquisition and
details of the abovementioned discussions are announced, shareholders are
advised to continue to exercise caution when dealing in their AMAP shares.
Johannesburg
14 December 2006
Sponsor and independent professional expert
Bridge Capital
Attorneys
Edward Nathan Sonnenbergs
Date: 14/12/2006 15:51:01 Produced by the JSE SENS Department.
