To view the PDF file, sign up for a MySharenet subscription.

THE ACQUISITION BY BIDVEST PLC OF BOOKER FOODSERVICE GROUP

Release Date: 14/05/1999 08:44
Code(s): BVT
Wrap Text
THE BIDVEST GROUP LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
(REGISTRATION NUMBER 05/21180/08)
("BIDVEST")
THE ACQUISITION BY BIDVEST PLC ("PLC") OF
BOOKER FOODSERVICE GROUP LIMITED ("BFS")
1. INTRODUCTION

AN AGREEMENT HAS BEEN ENTERED INTO BETWEEN PLC, A 56% SUBSIDIARY OF BIDVEST, AND BOOKER PLC PURSUANT TO WHICH PLC HAS AGREED TO ACQUIRE 100% OF BFS THE LEADING FOOD SERVICE DISTRIBUTION COMPANY IN THE UK, FOR A TOTAL CONSIDERATION OF GBP122,4 MILLION ("THE BFS ACQUISITION"), SUBJECT TO THE FULFILMENT OF THE CONDITIONS DETAILED IN PARAGRAPH 5 BELOW. 2. RATIONALE FOR THE BFS ACQUISITION
THE BFS ACQUISITION WILL GIVE BIDVEST, THROUGH PLC, A PLATFORM IN THE UNITED KINGDOM AND IS IN LINE WITH ITS STRATEGY OF EXPANDING INTO OVERSEAS MARKETS IN AREAS IN WHICH IT HAS A CORE COMPETENCE. THE BFS ACQUISITION COMPLEMENTS AND ENHANCES THE EXISTING FOODSERVICE BUSINESSES IN SOUTH AFRICA AND AUSTRALIA. THE BUSINESS OF BFS WILL BE MANAGED IN ACCORDANCE WITH THE BIDVEST PHILOSOPHY OF DECENTRALISED BUSINESS UNITS WITH HIGHLY INCENTIVISED MANAGEMENT TEAMS. 3. THE BFS ACQUISITION 3.1 NATURE OF BUSINESS OF BFS
BFS IS THE MARKET LEADER WITH A SIGNIFICANT MARKET SHARE IN THE DISTRIBUTION OF FOOD AND RELATED PRODUCTS AND SERVICES FOR FOODSERVICE MARKETS IN THE UK. BFS HAS AN ESTIMATED MARKET SHARE OF 11% OF THE TOTAL UK FOODSERVICE MARKET, WHICH IS ESTIMATED TO BE WORTH APPROXIMATELY GBP8,5 BILLION PER ANNUM. BFS COMPRISES THREE KEY BUSINESSES WHOSE PRINCIPAL ACTIVITIES ARE AS FOLLOWS: * FOODSERVICE DISTRIBUTION ("BFSW");
* DEDICATED CONTRACT DISTRIBUTION FOR THE UK MINISTRY OF DEFENCE ("MOD CONTRACT"); AND * MULTI-USER CONTRACT DISTRIBUTION ("BFSCD"). 3.1.1 BFSW
BFSW IS ONE OF THE UK'S LARGEST FOODSERVICE DISTRIBUTORS WITH THE CAPACITY TO OFFER A FULL RANGE OF FLEXIBLE DELIVERY OPTIONS INCLUDING DEDICATED AMBIENT, DEDICATED FROZEN, CHILLED FOODS AND FULL, MULTI-TEMPERATURE DELIVERY. 3.1.2 THE MOD CONTRACT
THE MOD CONTRACT IS A FIVE-YEAR CONTRACT TO SUPPLY A FULL, MULTI-TEMPERATURE SERVICE TO ALL MOD LAND BASES IN THE UK, NORTHERN IRELAND, GERMANY, THE SOUTH ATLANTIC, CROATIA AND CYPRUS AS WELL AS TO SHIPS, SUBMARINES AND EXERCISES. 3.1.3 BFSCD
BFSCD OPERATES IN THE FOODSERVICE CONTRACT DISTRIBUTION MARKET SUPPLYING LARGER, DISCIPLINED CUSTOMERS MAINLY TO: * FAST FOOD RESTAURANTS; * PUBS; AND * MOTORWAY SERVICE AREAS. 3.2 TERMS OF THE BFS ACQUISITION
THE PURCHASE CONSIDERATION WILL BE SETTLED BY PLC IN CASH ON OR ABOUT JUNE 14, 1999. IN ORDER TO FUND THE BFS ACQUISITION, PLC WILL HAVE A RIGHTS OFFER AFTER WHICH PLC WILL BE TOTALLY UNGEARED. BIDVEST HAS UNDERTAKEN TO FOLLOW ITS RIGHTS IN TERMS OF THE RIGHTS OFFER UTILISING ITS OFFSHORE CASH RESOURCES.
THE BFS ACQUISITION IS SUBJECT TO TERMS AND CONDITIONS THAT ARE NORMALLY ASSOCIATED WITH A TRANSACTION OF THIS NATURE. 4. BIDVEST FINANCIAL EFFECTS
ON THE ASSUMPTION THAT THE BFS ACQUISITION HAD BEEN IMPLEMENTED FOR THE 12 MONTHS ENDED DECEMBER 31, 1998 AND THE PLC RIGHTS OFFER HAD BEEN COMPLETED, THE BFS ACQUISITION WOULD NOT HAVE HAD A MATERIAL EFFECT ON BIDVEST'S EARNINGS PER SHARE AND NET ASSET VALUE PER SHARE. THE PRO FORMA PRE-TAX OPERATING PROFIT OF BFS FOR THE YEAR ENDED DECEMBER 31, 1998 WAS GBP11,5 MILLION AND THE ESTIMATED NET ASSET VALUE, (ON A CASH AND DEBT FREE BASIS) IN TERMS OF THE BFS ACQUISITION IS GBP69,5 MILLION.
NOTWITHSTANDING THAT THE BFS ACQUISITION IS EARNINGS NEUTRAL, BIDVEST REMAINS CONFIDENT THAT THE IMPLEMENTATION OF THE BIDVEST BUSINESS PHILOSOPHY WILL RESULT IN SHORT TO MEDIUM TERM BENEFITS. 5. CONDITIONS PRECEDENT
THE BFS ACQUISITION IS SUBJECT TO THE APPROVAL BY BOOKER PLC SHAREHOLDERS IN GENERAL MEETING. JOHANNESBURG MAY 14, 1999 MERCHANT BANKS TO BIDVEST IN SOUTH AFRICA INVESTEC BANK LIMITED (REG NO 69/04763/06) IN THE UNITED KINGDOM INVESTEC HENDERSON CROSWAITE CORPORATE FINANCE ATTORNEYS IN SOUTH AFRICA WERKSMANS ATTORNEYS ATTORNEYS IN THE UNITED KINGDOM FRESHFIELDS SPONSORING BROKERS MERRILL LYNCH SOUTH AFRICA (PTY) LTD. MEMBER OF THE JOHANNESBURG STOCK EXCHANGE REGISTRATION NUMBER 95/01805/07 SG FRANKEL POLLAK SECURITIES (PTY) LTD REG. NO. 96/05886/07 (MEMBER OF THE JOHANNESBURG STOCK EXCHANGE) HSBC SIMPSON MCKIE (PTY) LIMITED MEMBER OF THE JOHANNESBURG STOCK EXCHANGE REG. NO. 84/01736/07 INVESTEC SECURITIES LIMITED MEMBER OF THE JOHANNESBURG STOCK EXCHANGE (REGISTRATION NO. 72/08905/06)

Share This Story