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Acquisition of A-Link Freight, Inc. (USA)
SANTOVA LIMITED
(“Santova” or “the Company”)
Registration Number: 1998/018118/06
Share code: SNV
ISIN: ZAE000159711
Acquisition of A-Link Freight, Inc. (USA)
Introduction
The Board of Santova is pleased to announce that subject to the terms set out below, Santova
has concluded a purchase and sale agreement to acquire 100% of the share capital or assets of
A-Link Freight, Inc. (“A-Link”) from Universal Shipping, Inc. for an amount of USD 2 350
000 with effect 21 September 2022 (“effective date”).
Description of the business
A-Link is based in Los Angeles (“L.A.”), California, and has been operating for over 20 years
providing air freight services to and from the United States of America (“USA”) with specific
focus on exports from Los Angeles airport (“LAX”). Their agreements with major international
carriers allow A-Link to provide competitive rates with a reliable service.
A-Link focuses on daily consolidations from L.A. to the Far East and other key hubs across the
globe as well as door-to-door services. They operate in a niche market supporting ecommerce
which has resulted in A-Link becoming a reputable service provider to the industry. A-Link
also offers warehousing near LAX with many customers taking advantage of their cross-dock
services.
Rationale for the acquisition
The USA has been a focus area for Santova for numerous years with a number of existing
clients importing from and exporting to the region. Due to the premium the market attributes
to logistics businesses in the USA, Santova has been cautious in its entry into the region and
patient in pursuing opportunities.
A-Link is strategically located in Inglewood, California, which is in close proximity to LAX.
In 2021, LAX ranked as the fifth busiest airport globally having recorded 506,769 aircraft
movements to service over 48 million passengers and 3 million tons of freight.
Los Angeles also offers a complex multimodal transportation infrastructure, which serves as a
regional, national and international hub for the movement of freight by air, sea, road and rail.
It further hosts the United States' largest port complex, an extensive freight and passenger rail
infrastructure, including light rail lines and an extensive freeway and road system.
The ports of Los Angeles and Long Beach, account for approximately 40% of all shipping
containers entering the USA.
Purchase Price
The purchase price payable for the acquisition of A-Link is as follows:
* A first installment of USD 645 000 payable on the effective date;
* A second installment of USD 705 000 payable within 180 days of the effective date;
* A third installment of USD 1 000 000 payable within 2 years of the effective date,
subject to the warranty provisions set out below;
The warranty conditions require A-Link to produce cumulative earnings before interest, taxes,
and amortization (“EBITDA”) of USD 1 200 000 for the 2 years after the effective date.
The third installment will be proportionality reduced on a dollar for dollar basis should there
be any shortfall in the warranted EBITDA.
The acquisition will be funded through Santova’s cash reserves and the R75 million medium
term acquisition loan facility, which was approved in 2018 by the Group’s primary
transactional bankers for general acquisition purposes.
Key Conditions
The purchase and sale agreement allows Santova to either acquire and transfer the assets from
A-Link into a newly formed company, or to acquire 100% of the shares in A-Link.
Santova assumes full control as of the effective date and has up to one year from the effective
date to decide between closing the purchase as a purchase of assets or shares.
Categorisation
The total maximum purchase consideration for A- Link is less than 5% of the company’s
market capitalisation and is thus neither a category 1 nor a category 2 transaction in terms of
the JSE Listings Requirements. The board, however, considers it prudent to inform
shareholders of this strategic acquisition for Santova.
Value of net assets and profit attributable to the net assets
The NAV of A-Link, estimated at USD 750 000 as of the effective date, is currently being
calculated by the seller and will be finalised prior to completion. Upon completion of the
effective date accounts and approval of the calculation by Santova, A-Link will distribute the
NAV to the seller and an equal amount will be remitted to A-Link by Santova.
All profits generated by A-Link accrue to Santova as of the effective date.
Articles of Association
Santova has confirmed that the Articles of Incorporation of A-Link contain no provisions that
would frustrate Santova in any way from compliance with its obligations in terms of the JSE
Listings Requirements and furthermore do not contain any provisions that will relieve Santova
from compliance with those Listings Requirements.
22 September 2022
Durban
Sponsor and Corporate Advisor
River Group
Date: 22-09-2022 10:15:00
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