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Omnia Holdings Limited - Acquisition Further Diversifies Group

Release Date: 05/06/2003 10:01:01      Code(s): OMN
Omnia Holdings Limited - Acquisition Further Diversifies Group                  
OMNIA ACQUISITION FURTHER DIVERSIFIES GROUP                                     
(Incorporated in the Republic of South Africa)                                  
(Registration number: 1967/003680/06)                                           
Share Code: OMN                                                                 
ISIN: ZAE000005153                                                              
Omnia, a specialised chemical services company providing customised solutions in
the agricultural, mining and industrial chemical markets, today announced that  
it has acquired the largest distributor and trader of chemicals in South Africa,
the Prochem Group, for R542 million together with the assumption of about R76   
million in interest-bearing debt.                                               
The purchase consideration will be settled as follows:                          
R187 973 000 from Omnia"s existing cash resources;                              
R35 631 625 by the issue of new Omnia shares to Prochem that will be distributed
to the existing Prochem management shareholders and the participants in the     
Prochem share trust;                                                            
R300 000 000 via long term debt raised from a consortium of banks; and          
R18 165 375 from existing short-term banking facilities.                        
Omnia MD Rod Humphris said:                                                     
"Following a strategic evaluation process of how best to expand our chemical    
interests in South Africa, we decided that the acquisition of a strong service- 
based chemical distribution business focused on the customer interface was the  
preferred option as it provided immediate low-risk access to in-depth knowledge 
of the relevant chemical markets."                                              
Prochem is the major distributor for a number of domestic and international     
companies, representing many of the world"s leading chemical companies. Prochem 
has a diverse base of customers (over 6 000), products (over 600) and suppliers 
(over 100), with no disproportionate contribution from any one customer or      
The acquisition will provide Omnia with a more diversified portfolio of         
businesses, with a better balance between the agricultural and chemical         
interests. Although Omnia has proven its ability to manage risk in the          
fertilizer industry despite the effects of weather phenomena like El Nino, the  
new balance strengthens this ability further, and will continue to reduce       
earnings and cash flow volatility and limit weather-related risk.               
"The acquisition represents a carefully considered and decisive move to position
the Group for sustainable profitable growth into the future. It substantially   
alters our profile and achieves a much improved balance across our interests,   
resulting in a lower relative exposure to Southern African agriculture," added  
The acquisition establishes a new platform for growth for Omnia, bringing with  
it a host of synergistic benefits that will enhance Omnia"s business model of   
adding value to customers by leveraging its intellectual capital and technology.
It provides an established chemical distribution network across South Africa,   
serving to strengthen Omnia"s interface with customers.                         
Prochem has a number of well-known brands in its stable, namely Protea          
Chemicals, Chempro, Montan Chemicals and Duravin Chemicals. Prochem also owns   
50% of a small chemical distribution business in Zimbabwe.                      
Prochem brings with it a very experienced management team with a strong focus on
service and a reputation for rapid delivery.  Prochem has developed an excellent
and competitive national distribution infrastructure, with 12 points of presence
throughout South Africa.                                                        
Prochem has grown organically over its 40 years in existence and has invested in
warehousing, bulk storage, transportation, laboratories and its people. Prochem 
has consistently delivered strong results, with current turnover in excess of   
R1.5 billion and compounded turnover growth over the last five years in excess  
of 20%.                                                                         
"We are excited about becoming part of the Omnia Group as our businesses are    
built on the same fundamental imperative of adding value to our customers. The  
deal provides critical mass to both businesses and enables a host of synergistic
benefits we can exploit to further strengthen our offering," said Prochem MD Rod
Although the acquisition is large relative to Omnia"s market capitalisation and 
will increase debt levels in the short-term, the strong cash flow generation of 
both Omnia and Prochem is expected to reduce debt quickly, aided by expected    
lower interest rates in the foreseeable future.                                 
As Omnia is expected to release its results for the year ended 31 March 2003 on 
12 June 2003, the pro forma financial effects of the acquisition will be        
published with those results.                                                   
The acquisition is conditional upon the approval of Omnia shareholders in       
general meeting, the granting of the requisite regulatory approvals, including  
the Competition Commission, Omnia securing funding arrangements for payment of  
part of the purchase price to the reasonable satisfaction of the parties, the   
approval of the Prochem shareholders in general meeting, the acceptance of Omnia
of the results of its due diligence and Omnia entering into service agreements  
with the key executives of Prochem.                                             
Issued by                                                                       
BRUNSWICK SA:                      Tel: 011 268 5750                            
Heidi Geldenhuys                        Cell:     083 325 8924                  
Glenn O"Hearne                     Cell:     082 600 7866                       
For more information contact:  Omnia (011) 709 8850                             
Rod Humphris, MD,  (011) 709 8852                                               
Press release                                                                   
5 June 2003                                                                     
Date: 05/06/2003 10:01:05 AM Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department                                             

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