| Fri 15 Dec 2006, 12:05 | | SHF - Steinhoff - Acquisition certain of the busin |
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SHF
SHF
SHF - Steinhoff - Acquisition certain of the businesses of Geros
STEINHOFF INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration Number 1998/003951/06)
Share code: SHF & ISIN: ZAE000016176
("Steinhoff" or "the Group")
ACQUISITION BY STEINHOFF AFRICA HOLDINGS (PROPRIETARY) LIMITED ("Steinhoff
Africa") OF CERTAIN OF THE BUSINESSES OF GEROS BETEILIGUNGSVERWALTUNG GmbH
("Geros")
1. BACKGROUND
1.1 An agreement has been entered into on 13 December 2006 between, inter
alia, Steinhoff Africa and Geros ("the agreement") in terms of which
Steinhoff Africa will acquire the shares in and claims against or
businesses of certain operating companies of Geros (collectively, "the
Geros businesses"), ("the acquisition").
1.2 The Geros businesses are involved in wire drawing and the
manufacturing and distribution of bedding springs and components.
1.3 Geros is controlled by Daun et Cie AG, a company controlled by Mr
Claas Daun, a non-executive director of Steinhoff.
2. THE ACQUISITION
2.1 In terms of the agreement, which is subject to the conditions
precedent set out in 5, the purchase consideration payable amounts to
R169,8 million of which approximately R19,4 million in cash ("the
contingent consideration") will remain outstanding pending the
achievement of a profit warranty in respect of one of the Geros
businesses.
2.2 Accordingly, the net purchase consideration of R150,4 million, will be
settled by the issue of 6 396 405 Steinhoff shares ("the Steinhoff
consideration shares") at an issue price of R23,51 per share, being
the closing market price of Steinhoff shares on 12 December 2006.
2.3 The Steinhoff consideration shares accruing to the executive
management of the Geros businesses in respect of their current
shareholdings in the Geros businesses, will be subject to three-year
sales restrictions with effect from the implementation date,
whereafter they may be dealt with in three equal tranches over three
years.
2.4 In the event of the profit warranty referred to in 2.1 above being
achieved by not later than 31 December 2008, the contingent
consideration will be payable, free of interest, in cash. Failing the
profit warranty being achieved by 31 December 2008, the contingent
consideration and Steinhoff`s obligations in respect thereof, will
lapse.
3. RATIONALE FOR THE ACQUISITION AND PROSPECTS OF THE GEROS BUSINESSES
The Geros businesses complement Steinhoff Africa`s existing raw materials
interests which currently produce foam and textiles mainly for the
furniture manufacturing industry. Accordingly, the acquisition will expand
the product offering of raw materials and components of Steinhoff Africa`s
Raw Materials division in line with Steinhoff`s composition as a
diversified industrial group in southern Africa.
The Geros businesses, under Steinhoff`s control, will also benefit from
significant synergies which are prevalent in areas such as raw material
sourcing (e.g. steel and plastic), distribution and logistics and export
growth of components and springs through Steinhoff`s international contacts
and networks.
4. FINANCIAL EFFECTS FOR STEINHOFF
Although the pro forma effects of the acquisition on Steinhoff`s earnings,
headline earnings, net asset value and tangible net asset value per share
are immaterial due to the relative small size of the Geros businesses, the
strategic importance of the acquisition is expected to benefit the Group in
future.
5. CONDITIONS PRECEDENT
5.1 The acquisition is subject to the fulfilment of, inter alia, the
following conditions precedent:
5.1.1 the JSE Limited ("the JSE") granting a listing of the
Steinhoff consideration shares;
5.1.2 the approval of the acquisition by the Competition
Authorities, to the extent required; and
5.1.3 the approval of the acquisition by the Exchange Control
Department of the South African Reserve Bank, to the extent
required.
6 RELATED PARTY TRANSACTION AND INDEPENDENT FAIR AND REASONABLE OPINION
The consideration constitutes more than 0,25% but less than 1% of
Steinhoff`s market capitalisation and, consequently, neither Steinhoff
shareholder approval nor a circular to Steinhoff shareholders is required.
However, as the acquisition constitutes a "small related party transaction"
as defined in section 10 of the JSE Listings Requirements, a "fair and
reasonable" opinion from an independent expert is required.
PriceWaterhouseCoopers has been appointed in this regard and the company
will make a further announcement on SENS once the opinion has been approved
by the JSE.
Johannesburg
15 December 2006
Sponsor
PSG Capital
Independent Adviser
PWC Corporate Finance (Pty) Limted
Date: 15/12/2006 12:05:01 Produced by the JSE SENS Department.
