MORVEST BUSINESS GROUP LIMITED - acquisition of asset

acquisition of asset

MORVEST BUSINESS GROUP LIMITED
 (Incorporated in the Republic of South Africa)
(Registration No. 2003/012583/06)
Share code: MOR     ISIN code: ZAE000152567
(“Morvest or the “Company”)

ACQUISITION OF THE SHARES AND CLAIMS OF THE BUSINESS OF
ISOLVE BUSINESS SOLUTIONS (PTY) LIMITED AND SQLDB
TECHNOLOGIES SOLUTIONS (PTY) LIMITED AND RENEWAL OF
CAUTIONARY ANNOUNCEMENT

1. Introduction and terms

Shareholders are advised that Morvest, through its 50%
subsidiary ITQ Business Solutions (Pty) Limited (“ITQ or
the Purchaser”), has entered into an agreement with Bhavmon
(Pty) Limited (“Bhavmon” or “the Seller”), and subject to
the conditions precedent, to acquire 60% of the shares and
claims of the issued share capital of both Isolve Business
Solutions (Pty) Limited and SQLDB Technology Solutions
(Pty) Limited (collectively “the Companies”) from the
Seller for a purchase consideration of R16.2 million (“the
purchase consideration“)(“the acquisition”).

The effective date of the acquisition is 1 January 2013.

2. Settlement of the consideration

Settlement of the purchase consideration of R16.2 million
will be in cash and is subject to the Companies achieving
their forecast 2013 and 2014 profit after tax (“PAT”)
hurdle as follows:

  -   an initial cash payment of R7.2 million payable on the
      the first day after the last of the conditions
      precedent are fulfilled;
  -   R3.6 million shall be payable within 30 days after the
      issue by the auditors of the 2013 PAT certificate; and
  -   R5.4 million shall be payable within 30 days after the
      issue by the auditors of the 2014 PAT certificate,
      subject to the Companies achieving the cumulative PAT
      hurdle of R13.2 million for the financial period
      ending on 31 December 2013 and 2014.

In the event that the cumulative PAT achieved is less than
the cumulative PAT Hurdle of R13.2 million, the purchase
price shall be reduced by R1.8 million.        If the cumulative
PAT achieved is less than R12.5 million, then the purchase
price will be reduced by R4.00 for every rand that the
cumulative PAT is short of the cumulative PAT hurdle.


3. Description of    the   Companies   and   rationale   for   the
   acquisition

The Companies’core business the provision of business
intelligence solutions, enterprise solutions, custom
development solutions, data management solutions, hardware
and licensing and learning solutions and services.


The acquisition   is    consistent   with   the   Company’s   growth
strategy.

4. Financial effects

The pro forma financial effects in relation to the
acquisition are not yet available.



5. Conditions precedent
The acquisition is subject to the fulfilment of each of
the following suspensive conditions:


          -   The  delivery of the      audited       financial
              statements     of    the     Companies      for     the       year
              ended     31   May        2012,     together        with       the
              unaudited management accounts which include
              the     2013     budget       (“the      effective             date
              accounts”)     by        Bhavmon    to   ITQ,       to        ITQ’s
              satisfaction;


          -   The     satisfactory         completion        of        a      due
              diligence           investigation            by               ITQ’s
              representatives;
          -   the   approval      by    Bhavmon     shareholders            of   a
              special     resolution        in    terms    of      Sections
              112(2) and 115(2) of the Companies Act No 71
              of 2008;
          -        the conclusion of shareholders agreements
              in    relation      to     the     Companies        on        terms
              acceptable to ITQ, Morvest and Bhavmon;
          -   the approval by ITQ, Morvest and the Seller
              of   the   service  contracts   between   the
              shareholders and the Companies;
          -      the approval of Bhavmon’s directors of the
              acquisition and delivery of a signed copy of
              the relevant directors resolutions to ITQ;
              and
          -   the approval of the acquisition  by    the
              boards of ITQ, Bhavmon and Morvest.
6. Warranties

The   acquisition  is   subject  to   warranties  that   are
considered normal for a transaction of this nature.


7. Categorisation of the acquisition

The acquisition is categorised as a Category 2 transaction
in terms of the JSE Limited Listings Requirements.

8. Renewal of cautionary announcement

Shareholders are advised to exercise caution when dealing
in the Company’s securities until a further announcement is
made that includes the financial effects.


Johannesburg
27 February 2013

Sponsor: Sasfin Capital
(A division of Sasfin Bank Limited)

Date: 28/02/2013 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.