ANCHOR GROUP LIMITED - Acquisition of an effective 63% interest in M Jurgens Financial Services Proprietary Limited

Acquisition of an effective 63% interest in M Jurgens Financial Services Proprietary Limited

ANCHOR GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2009/005413/06)
Share code: ACG ISIN: ZAE000193389
(“Anchor” or “the Company”)

ACQUISITION OF AN EFFECTIVE 63% INTEREST IN M JURGENS FINANCIAL SERVICES PROPRIETARY LIMITED


1.    INTRODUCTION

      Anchor has entered into an agreement to acquire a 50% interest in the issued share capital (“sale shares”) of
      M Jurgens Financial Services Proprietary Limited, a financial services company (“M Jurgens”) from Mark
      Jurgens (“the seller”) for a purchase price of R49 500 000 (“the Transaction”).

      Anchor will acquire a further 13% of M Jurgens (“13% shareholding”) on 1 January 2023 based on the net after
      tax profit (“NPAT”) earned by M Jurgens during the financial year ending 31 December 2022, and the purchase
      price for the 13% shareholding will not exceed R49 500 000.
      The NPAT earned by M Jurgens during the 12-month period ending 31 December 2019 is R12 375 000.

2.    RATIONALE

      The Transaction is expected to increase Anchor’s distribution capabilities and increase the Company’s Assets
      under Advice by R5 billion.

3.    TERMS OF THE ACQUISITION

      3.1       The Transaction

                The effective date of the Transaction is, subject to the fulfilment or waiver of the condition’s
                precedent, 1 January 2020 (“the effective date”).

                 The purchase price payable for the sale shares is R49 500 000, which shall be payable in cash on
                 signature date as follows:

                 -      R44 500 000 payable to the seller, and
                 -      R5 000 000 which will be held in escrow by an escrow agent (“escrow amount”) as security
                 for any purchase price adjustment as further set out below.

                 The seller warrants that M Jurgens will have a compound annual growth rate (“CAGR”) of 12% net
                 profit after tax (“NPAT”) for the first three years after the effective date. In the event that the 12%
                 CAGR is not achieved, the purchase price in respect of the sale shares shall be adjusted downwards
                 and the adjustment amount will be received from the escrow amount and the balance shall be
                 released to the seller (“the demand guarantee”). There will be no price adjustment upwards if M
                 Jurgens exceeds the warranted CAGR.
                 Anchor and the seller have agreed, with effect from 1 January 2023, that the seller will dispose of a
                 further 13% interest (“13% shareholding”) in M Jurgens to Anchor. The purchase price payable for
                 the 13% shareholding will determined based on a pre-agreed formula to be calculated on 1 January
                 2023, based on the NPAT earned by M Jurgens during the financial year ending 31 December 2022,
                 and will not exceed R49,500,000.

     3.2       Conditions precedent

               All conditions precedent in the agreement have been fulfilled.

     3.3       Warranties and undertakings

               The Transaction is subject to undertakings, warranties and indemnities which are normal for a
               transaction of this nature.

4. FINANCIAL INFORMATION

    As at 1 January 2020 the value of the net assets that are the subject of the transaction, is R2.3 million and the
    profits attributable for the period 1 January 2019 to 31 December 2019 are, R12 375 000 with assets under
    advice of R5 billion.

    The above financial information has been extracted from the management accounts of M Jurgen for the 12-
    month period ended 31 December 2019 which were prepared in terms of the M Jurgen’s accounting policies
    and IFRS.

5. CATEGORISATION OF THE TRANSACTION

    The acquisition is classified as a category 2 transaction in terms of the JSE Listings Requirements.
    Accordingly, it is not subject to the approval by shareholders.

28 February 2020

Designated advisor
Java Capital 

Date: 28-02-2020 02:40:00
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