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AFE - AECI Limited - Sale of business

Release Date: 17/07/2007 13:00:02      Code(s): AFE
AFE - AECI Limited - Sale of business                                           
AECI LIMITED                                                                    
Incorporated in the Republic of South Africa                                    
(Registration No. 1924/002590/06)                                               
Share code:  AFE                                                                
ISIN No. ZAE000000220                                                           
AECI LIMITED:  SALE OF BUSINESS                                                 
AECI Limited ("AECI" or "the Company") has agreed to sell its decorative        
coatings business, trading as Dulux, to ICI plc ("ICI") for a cash              
consideration of R745 million.  The sale includes the South African operations  
as well as the subsidiaries in Botswana, Malawi, Namibia, Swaziland and         
Zambia.  Subject to the fulfillment of the conditions precedent as set out      
below, it is expected that the transaction will take effect from 1 October      
2007, when a gain on disposal of some R500 million will be recognised by AECI.  
The proceeds will be used to fund the Company`s major capital projects and      
potential acquisitions.                                                         
AECI`s strategic focus is increasingly on the supply of specialty products and  
services based on chemistry to customers in the mining and manufacturing        
sectors in Africa and elsewhere, with an emphasis on technical support and      
application know how.  The Dulux business, which targets primarily the retail   
consumer market, is not well aligned with this strategy.                        
ICI operates a leading international decorative coatings business which owns    
the Dulux brand outside of Southern Africa and Australia.  ICI`s global         
expertise in marketing, technology and procurement, amongst other               
capabilities, is expected to accelerate the profitable growth of the regional   
Dulux business and to bring significant benefit to its people.                  
Conditions precedent                                                            
The sale of the South African business is subject to the following conditions:  
    *the unconditional approval of the Exchange Control division of the         
    Reserve Bank of South Africa, for the implementation of the sale of the     
South African business in accordance with the terms of the Sale of          
    Business Agreement; and                                                     
    *the unconditional approval of the competition authorities in terms of      
    the Competition Act for the sale of the South African business in           
accordance with the Sale of Business Agreement;                             
The sale of the subsidiaries is subject to the following conditions:            
    *the sale of the South African business becoming unconditional; and         
    *all government and other forms of regulatory approval being complied       
with in the applicable jurisdictions.                                       
Financial effects                                                               
Set out in the table below are the pro forma financial effects of the           
transaction on the Company`s earnings per share ("EPS"), headline earnings per  
share ("HEPS"), net asset value per share ("NAV") and tangible net asset value  
per share ("TNAV") , based on the annual results for the year ended 31          
December 2006, had the transaction been implemented as at 1 January 2006 for    
income statement purposes and on 31 December 2006 for balance sheet purposes.   
The pro forma financial effects have been prepared for illustrative purposes    
only and, because of their nature, may not give a true reflection of the        
Company`s financial position, changes in equity, results of operations or cash  
flows. The pro forma financial effects are the responsibility of the Company`s  
                  Results as    Results adjusted for  Percentage                
                  published     the impact of the     change                    
                                disposal of Dulux                               
(cents)       (cents)               (%)                       
EPS (see notes 1   829           1 296                 56                       
and 2)                                                                          
HEPS (see notes 1  853           846                   -1                       
and 2)                                                                          
NAV (see note 3)   3 255         3 672                 13                       
TNAV (see note 3)  2 333         2 749                 18                       
1.   Dulux assumed to be sold for R745 million effective 1 January 2006 and     
    the proceeds used to reduce AECI borrowings.                                
2.   Interest rate on AECI borrowings assumed to average 7.7 per cent during    
3.   Dulux assumed to be sold for R745 million effective 31 December 2006.      
4.   Based on the number of shares in issue throughout 2006, being 110 431 458  
    shares excluding treasury shares held.                                      
17 July 2007                                                                    
Sponsor:  J.P.Morgan Equities Limited                                           
Date: 17/07/2007 13:00:02 Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department                             .                  

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