VALUE GROUP LIMITED - Acquisition by Value Group Limited of 100% of the Issued Ordinary Shares in Key Distributors (Pty) Ltd

Acquisition by Value Group Limited of 100% of the Issued Ordinary Shares in Key Distributors (Pty) Ltd

Value Group Limited
(Incorporated in the Republic of South Africa)
Registration number: 1997/002203/06
Share code: VLE
ISIN code: ZAE000016507
(“Value” or “the company’)


ACQUISITION BY VALUE GROUP LIMITED (“VALUE”) OF 100% OF THE ISSUED
ORDINARY SHARES IN KEY DISTRIBUTORS (PTY) LTD (“KEY”)

1.   INTRODUCTION

     1.1   Shareholders are advised that Value has entered into a binding agreement (“The
           Agreement”) to acquire 100% of the ordinary share capital of Key from Mr G.C.
           Peters, Mr W. Barnard, Mr B. Johnson and Mr J. Colyn.

     1.2   The salient terms and conditions of the Agreement, are as follows:

           1.2.1 A maximum purchase price of R32 680 004 (thirty two million six hundred
                 and eight thousand and four rand) will be paid for the shares, subject to
                 certain profit warranties and conditions being fulfilled;

           1.2.2 The Purchase price is based on a combination of a Price-Earnings ratio of
                 Key’s adjusted 2015 profit after tax (“PAT”), together with the fair Value of
                 Key’s immovable property.

2.   NATURE OF THE BUSINESS OF KEY

     Key carries on the business of warehousing, distributing, and wholesaling a variety of
     FMCG products into the formal and informal trade, including independent traders, fuel
     forecourts and small retailers. Key currently operates in the Gauteng, Polokwane,
     Nelspruit and Bloemfontein areas.

3.   RATIONALE OF THE ACQUISITION

     Over the last 8 years, Key has successfully conducted the aforesaid business in a
     hugely complex market. It has been run by skilled, hands on competent management,
     who will remain in the business for a minimum of 4 years subsequent to the effective
     date.

     As Key wholesales and delivers into the informal market, it offers Value a sought after
     access into this dynamic and enterprising area of the market. This acquisition will
     facilitate the opportunity for Value to diversify its business by owning and controlling its
     FMCG volumes, whilst simultaneously leveraging off its core national infrastructure in
     its logistics division. Conversely, the Value infrastructure will provide Key with the
     opportunity to grow its business nationally which will also enable Value’s customers
     access into this specialised segment of the market.

4.   EFFECTIVE DATE OF THE SALE

     Assuming all regulations are satisfied and conditions precedent fulfilled, the effective
     date of the transaction will be 1 March 2016.

5.   CONSIDERATION

     The cash consideration payable by Value to Key is R32 680 004 which amount is
     payable in three tranches, as follows:

     5.1   First payment – once all the conditions precedent have been fulfilled and the net
           asset value has been verified;
     5.2   Second payment – 15 months subsequent to the first payment;
     5.3   Third payment – 12 months subsequent to the second payment.

       The second and third payments are subject to Key achieving certain profit warranties.


6.   NET ASSET VALUE AND PROFITS ATTRIBUTABLE TO KEY

     6.1   The net asset value of Key to be acquired will be R17 735 676 (seventeen million
           seven hundred and thirty five thousand six hundred and seventy six rand).

     6.2   For the 2015 financial year Key achieved an adjusted PAT of R3 506 631.

7.   CONDITIONS PRECEDENT FOR THE SALE

     7.1   The sale is subject to the fulfilment or waiver, as the case may be, of the
           following conditions precedent:

           7.1.1 By the effective date, confirmation of the transaction by the Competition
                 Commission;
           7.1.2 By 29 February 2016, the approval by the respective boards of directors;
           7.1.3 By 29 February 2016, the approval of the transaction by certain of Key’s
                 suppliers.

8.   PROVISIONS OF THE SELLERS MEMORANDUM AND ARTICLES OF ASSOCIATION     

       The terms of the Sellers Memorandum and Articles of Association do not in any way
       prohibit Value from fulfilling its JSE listing requirements.

9.   CATEGORISATION OF THE SALE AND SHAREHOLDER APPROVAL

       This Sale is classified as a category 2 transaction in terms of Section 9.15 of the JSE
       Listing Requirements and accordingly will not require shareholder approval.



For and on behalf of the Board
Johannesburg

18 December 2015
Sponsors: Investec Bank Limited

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