| Thu 22 Mar 2007, 8:43 | | Remgro makes firm offer to Rainbow |
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RBW REM
RBW REM
REM/ RBW - Remgro/ Rainbow - Firm intention to make an offer by Remgro to
acquire the entire issued share capital of Rainbow
Remgro Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1968/006415/06)
Share Code: REM
ISIN: ZAE000026480
("Remgro")
Rainbow Chicken Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1966/004972/06)
Share code: RBW
ISIN: ZAE000019063
("Rainbow" or "the Company")
FIRM INTENTION TO MAKE AN OFFER BY REMGRO TO ACQUIRE THE ENTIRE ISSUED
SHARE CAPITAL OF RAINBOW
- Remgro makes firm offer to buy out 38% minority shareholding in
Rainbow
- Offer is for R16.00 cash for each Rainbow share or 9 Remgro shares for
every 100 shares in Rainbow
- Offer values Rainbow at R4.5 billion
- Offer is at 36% premium to closing share price of Rainbow on 20 March
2007 and 38% premium to the 10-day volume weighted average share price
- Rainbow shareholders also to receive the final dividend for the year
ended 31 March 2007
- Independent expert to be appointed by Rainbow for an opinion on the
offer and circular to shareholders to be issued in due course
- Rainbow to be delisted in due course
Thys Visser, Remgro CEO said:
"Our cash offer of R16.00 per Rainbow share is at a substantial premium to
Tuesday`s closing share price as well as the average share price over the
last ten days. We believe Rainbow will be more successful as an unlisted
company as it will be better able to manage the volatile external factors
affecting the business and its capital can be more efficiently structured.
Shareholders can elect to take cash or continue to share indirectly in the
future prospects of Rainbow by taking up the Remgro share alternative."
Enquiries:
Remgro:
Thys Visser 021 888 3330
College Hill:
Nicholas Williams 011 447 3030
1 Introduction
Rainbow and Remgro shareholders are advised that Remgro has submitted
written notification to the board of directors of Rainbow ("the
Rainbow Board") of a firm intention to make an offer by Remgro, or its
wholly-owned subsidiary, to acquire all the issued share capital of
Rainbow not already owned by Remgro or its subsidiaries ("the offer"
or "the acquisition"). Remgro and its subsidiaries currently hold
61.9% of the issued share capital of Rainbow.
2 Mechanism of the offer
The offer will be implemented by way of a scheme of arrangement in
terms of section 311 of the Companies Act, 1973 ("the Act"), to be
proposed by Remgro between Rainbow and its shareholders, other than
Remgro and its subsidiaries ("the scheme"). Upon implementation of the
scheme, an application will be made to the JSE Limited ("JSE") to
terminate the listing of all the issued shares of Rainbow on the JSE.
The holders of any vested options, on the last day to trade of the
scheme, to acquire ordinary shares in Rainbow in terms of Rainbow`s
share incentive scheme, will participate in the offer as any other
shareholder.
3 The terms of the offer
The offer consideration to Rainbow ordinary shareholders other than
Remgro ("offerees") will consist of:
- a cash consideration of R16.00 per Rainbow share ("the cash
alternative"); or
- 9 Remgro ordinary shares ("the share alternative") for every 100
shares held; or
- a combination of the above, to be elected by each shareholder, on
the condition that the share alternative may only be elected in
respect of blocks of 100 Rainbow shares each.
Shareholders will also be entitled to receive the final dividend for
the financial year ending 31 March 2007.
The default consideration will be the cash alternative. The cash
alternative represents a 36% premium on the closing price of Rainbow
on 20 March 2007 and a 38% premium to the 10-day volume weighted
average price per Rainbow ordinary share on 20 March 2007.
4 Rationale
Remgro is of the opinion that, as a large investment holding company,
it is better able to absorb short term fluctuations caused by
Rainbow`s exposure to external factors, like the fluctuating maize
price, than Rainbow as a standalone entity. In addition Remgro can
also structure Rainbow on a more efficient basis, than would be
possible in a listed environment. As a result Remgro proposes to
acquire all the minority interests in Rainbow at a value reflecting a
significant premium to current trading levels, whilst still ensuring
that Remgro`s internal hurdle rates are achieved. Rainbow shareholders
will have the option to continue to participate indirectly in the
business of Rainbow by accepting the Remgro share alternative and also
gaining access to the remainder of Remgro`s portfolio.
5 BEE
Rainbow is currently in the process of evaluating a BEE transaction.
This process will be halted until such time as the offer has been
successfully implemented. Once Rainbow has been delisted the process
will re-commence and the BEE transaction will be implemented.
Consequently, Remgro will carry the full cost of facilitating the BEE
transaction.
6 Cash confirmation
In terms of Rule 2.3.2 (b) and Rule 21.7 of the Securities Regulation
Panel ("SRP") Code, Rand Merchant Bank, a division of FirstRand Bank
Limited, has provided a cash confirmation to the SRP confirming that
Remgro has sufficient cash resources available to satisfy the maximum
cash consideration payable in terms of the offer.
7 Conditions precedent
The offer is subject to the fulfilment, or where applicable, waiver,
on or before 30 June 2007, or such other date as Rainbow and Remgro
may agree, of the following conditions:
7.1 the Rainbow Board, having considered the terms and conditions of the
offer and subject to the opinion of an appropriate independent expert,
express an opinion that the terms and conditions of the offer are fair
and reasonable to the offerees;
7.2 the scheme having been approved by the requisite majority of scheme
members;
7.3 the High Court having sanctioned the scheme;
7.4 a certified copy of the order of Court sanctioning the scheme having
been registered by the Registrar of Companies in accordance with the
requirements of the Act; and
7.5 the receipt of all requisite regulatory approvals in relation to the
offer.
8 Opinion and recommendations
The Rainbow Board will appoint independent experts to assist it in
considering the terms of the offer and to provide it with the external
advice required in terms of the SRP Code. The opinions and
recommendations of the independent advisors and the Rainbow Board will
be set out in a circular that will be sent to Rainbow shareholders.
9 Further documentation and timing
A circular containing full details of the offer will be posted to
Rainbow shareholders in due course. The following indicative timetable
is proposed:
Date Event
2007
19 April Lodge application to Court for leave to convene scheme
meeting
24 April High Court grants leave to convene scheme meeting
26 April Scheme documentation posted to shareholders
18 May Scheme meeting
23 May Rainbow annual results announcement
8 June Last day to trade to participate in the scheme
11 June Suspension of Rainbow shares on the JSE
15 June Record date of the scheme
18 June Operative date of the scheme
19 June Termination of Rainbow listing on the JSE
A more detailed timetable will be released on SENS and published in
the press at the time that the documentation is posted to
shareholders.
Durban
22 March 2007
Merchant bank and sponsor to Remgro
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Attorneys to Remgro
Hofmeyr, Herbstein & Gihwala Inc.
Sponsor to Rainbow
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 22/03/2007 07:59:52 Produced by the JSE SENS Department.
