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I-FUSION HOLDINGS LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
(REGISTRATION NUMBER 83/13542/06)
("I-FUSION")
THE BIDVEST GROUP LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
(REGISTRATION NUMBER 05/21180/06)
("BIDVEST")
A CONDITIONAL OFFER BY BIDVEST TO ALL I-FUSION SHAREHOLDERS
TO ACQUIRE ALL OR A PORTION OF THEIR I-FUSION SHARES
1. INTRODUCTION
FURTHER TO THE I-FUSION CAUTIONARY ANNOUNCEMENT DATED 13 MARCH 2000, THE
DISCUSSIONS REFERRED TO THEREIN HAVE BEEN TERMINATED BY I-FUSION. INVESTEC BANK
LIMITED IS AUTHORISED TO ANNOUNCE THAT, SUBJECT TO THE CONDITIONS PRECEDENT SET
OUT IN PARAGRAPH 5, BIDVEST WILL MAKE AN OFFER TO ALL I-FUSION SHAREHOLDERS ON
THE TERMS AND CONDITIONS SET OUT IN PARAGRAPH 2.
2. THE TRANSACTIONS
BIDVEST WILL MAKE AN OFFER TO ACQUIRE, WITH EFFECT FROM 1 JUNE 2000, ALL OR A
PORTION OF THE SHARES HELD BY I-FUSION SHAREHOLDERS FOR AN INITIAL PAYMENT OF
70 CENTS PER SHARE AND A POTENTIAL "AGTERSKOT" PAYMENT OF 80 CENTS PER SHARE,
OR THE ALTERNATIVE OFFER OF A PAYMENT OF 100 CENTS PER SHARE WITH NO AGTERSKOT.
THE OFFER AND THE ALTERNATIVE OFFER ARE SUBJECT TO THE SUBSCRIPTION BY BIDVEST
FOR R50 MILLION OF I-FUSION SHARES IN CASH ("THE ISSUE OF SHARES FOR CASH") AND
THE AMENDMENT TO THE I-FUSION SHARE INCENTIVE SCHEME EFFECTIVELY FOR THE
PURPOSES OF 2.4 BELOW (COLLECTIVELY "THE TRANSACTIONS"). PERSUANT TO THE
TRANSACTIONS BIDVEST WILL HOLD A MINIMUM OF 60% OF I-FUSION'S NEW ISSUED SHARE
CAPITAL.
2.1 THE OFFER
BIDVEST WILL OFFER TO ACQUIRE ALL OR A PORTION OF THE SHARES HELD BY THE
I-FUSION SHAREHOLDERS, SUBJECT TO THE FULFILMENT OR WAIVER OF THE CONDITIONS
PRECEDENT AS DETAILED IN PARAGRAPH 5, ON THE FOLLOWING BASIS:
- OFFER PRICE PER I-FUSION SHARE OF:
- 70 CENTS INITIALLY ("INITIAL OFFER"); AND
- 80 CENTS ON THE ACHIEVEMENT BY I-FUSION'S CURRENT OPERATIONS OF AN EARNINGS
PER SHARE OF AT LEAST 24 CENTS FOR THE 12 MONTHS ENDED 28 FEBRUARY 2001
("AGTERSKOT PAYMENT").
THE 80 CENTS WILL BE ADJUSTED ON A PRO RATA BASIS FOR EARNINGS LESS THAN 24
CENTS PER SHARE, AS FOLLOWS:
- 0 TO 15 CENTS EARNINGS PER SHARE, THERE WILL BE NO ADDITIONAL PAYMENT;
- 15 TO 24 CENTS EARNINGS PER SHARE, THERE WILL BE AN ADDITIONAL PAYMENT OF
8,889 CENTS (OR A PRO RATA PORTION HEREOF) FOR EVERY 1 CENT, OR PART OF A CENT
THEREOF, ACHIEVED UP TO A MAXIMUM PAYMENT OF 80 CENTS PER SHARE (COLLECTIVELY
THE INITIAL OFFER AND THE AGTERSKOT PAYMENT DEFINED AS "THE OFFER");
- THE INITIAL OFFER WILL BE SETTLED IN CASH AND THE AGTERSKOT PAYMENT WILL BE
SETTLED BY THE ISSUE OF BIDVEST SHARES AT A PRICE OF R45,00 PER BIDVEST SHARE
AS FOLLOWS:
- INITIAL OFFER - WITHIN 5 BUSINESS DAYS AFTER ALL THE CONDITIONS HAVE BEEN
FULFILLED OR WAIVED; AND
- AGTERSKOT PAYMENT - ON THE FINALISATION OF THE AUDITED EARNINGS PER SHARE
NUMBERS FOR THE RELEVANT PERIOD BUT IN ANY CASE BY NOT LATER THAN 31 MAY 2001.
2.2 THE ALTERNATIVE OFFER
IN ADDITION, AS AN ALTERNATIVE, BIDVEST WILL OFFER TO ACQUIRE ALL OR A PORTION
OF THE SHARES HELD BY THE I-FUSION SHAREHOLDERS FOR AN OFFER CONSIDERATION OF
100 CENTS PER I-FUSION SHARE WITH NO AGTERSKOT PAYMENT ("THE ALTERNATIVE
OFFER") PAYABLE IN CASH AT THE TIME THE INITIAL OFFER IS SETTLED (COLLECTIVELY
THE OFFER AND THE ALTERNATIVE OFFER DEFINED AS "THE OFFERS").
2.3 THE ISSUE OF SHARES FOR CASH
I-FUSION HAS UNDERTAKEN TO ISSUE 71 428 571 I-FUSION SHARES AT 70 CENTS PER
I-FUSION SHARE, THE CURRENT MARKET PRICE, TO BIDVEST FOR A CASH AMOUNT OF
R50 MILLION.
2.4 THE AMENDMENT OF THE SHARE INCENTIVE SCHEME
THE MANAGEMENT AND STAFF OF I-FUSION WILL REMAIN WITH I-FUSION AND WILL BE
INCENTIVISED IN TERMS OF THE I-FUSION SHARE INCENTIVE SCHEME ("SHARE SCHEME").
6 300 000 NEW OPTIONS WERE GRANTED ON 9 MAY 2000, AT A STRIKE PRICE OF 54 CENTS
PER I-FUSION SHARE IN TERMS OF THE SHARE SCHEME, AND THIS ISSUE NEEDS TO BE
RATIFIED BY THE CURRENT I-FUSION SHAREHOLDERS BY AMENDING THE SHARE SCHEME.
2.5 CASH CONFIRMATION
INVESTEC BANK LIMITED HAS CONFIRMED TO THE SECURITIES REGULATION PANEL ("SRP")
THAT BIDVEST HAS SUFFICIENT FACILITIES AVAILABLE TO SATISFY THE FULL
OBLIGATIONS OF THE OFFERS.
3. RATIONALE FOR THE TRANSACTIONS
I-FUSION SHAREHOLDERS ARE REFERRED TO THE I-FUSION FULL YEAR RESULTS FOR THE
PERIOD ENDED 29 FEBRUARY 2000, APPEARING ELSEWHERE IN THIS PUBLICATION.
I-FUSION HAS CONSOLIDATED ITS POSITION IN THE MARKET AND CERTAIN STRATEGIC
DECISIONS WERE MADE WHICH AFFECTED
I-FUSION'S PROFITABILITY. IN PARTICULAR I-FUSION MADE A SUBSTANTIAL INVESTMENT
IN EXPERIENCED NETWORKING RESOURCES, AND IS NOW WELL POSITIONED TO TAKE
ADVANTAGE OF THE GROWTH OF CONVERGED NETWORK TECHNOLOGY. ADDITIONALLY, I-FUSION
ESTABLISHED A COMMAND CENTRE PROVIDING THE VEHICLE TO MANAGE THE DELIVERY OF
SERVICES AND SOLUTIONS TO ENSURE THE ABILITY TO LEVERAGE TECHNOLOGY RESULTING
IN GREATER EFFICIENCIES ACROSS I-FUSION. IT WAS NECESSARY FOR I-FUSION TO
INTRODUCE A STRATEGIC CONTROLLING SHAREHOLDER WHO IS ABLE TO ADD VALUE TO THE
CURRENT AND FUTURE OPERATIONS OF I-FUSION, AND THE RECAPITALISATION WILL ENABLE
I-FUSION TO CAPITALISE ON THE CONSOLIDATION TAKING PLACE IN THE INFORMATION
TECHNOLOGY ("IT") INDUSTRY.
OVER THE YEARS BIDVEST HAS ACQUIRED BUSINESSES EACH WITH ITS OWN IT AND NETWORK
INFRASTRUCTURE, AND HAS REACHED THE POINT WHERE IT HAS POTENTIALLY ONE OF THE
LARGEST IT NETWORKS IN SOUTH AFRICA. BIDVEST HAS MAJOR IT AND E-COMMERCE
CAPABILITIES WITHIN AND ACROSS ITS VARIOUS OPERATING DIVISIONS EACH OPERATING
INDEPENDENTLY.
BIDVEST IS UNDENIABLY A MAJOR PLAYER IN THE DISTRIBUTION BUSINESS IN SOUTH
AFRICA AND IS ONE OF A FEW DISTRIBUTION COMPANIES THAT HAS CRITICAL MASS
COMBINED WITH INTERNATIONAL DISTRIBUTION CAPABILITIES. THE RAPID GROWTH OF
E-COMMERCE HAS PRESENTED A MAJOR OPPORTUNITY TO USE BIDVEST'S IT AND
DISTRIBUTION BASE TO CREATE A TRULY INTEGRATED DISTRIBUTION, IT AND E-COMMERCE
BUSINESS.
THE I-FUSION INFRASTRUCTURE WILL GIVE BIDVEST THE OPPORTUNITY TO CREATE AN
UNPARALLELED NETWORK, HARNESS BIDVEST'S IT EXPERTISE AND TO CREATE A PLATFORM
AND BASE FOR ONGOING E-COMMERCE AND INTERNET CAPABILITIES FOR THE MARKET AT
LARGE.
4. THE FINANCIAL EFFECTS
THE TABLES BELOW SET OUT THE PRO FORMA FINANCIAL EFFECTS ON AN I-FUSION
SHAREHOLDER OF THE ISSUE OF SHARES FOR CASH AND THE ALTERNATIVE OFFER:
BEFORE THE AFTER THE
ISSUE OF ISSUE OF
SHARES SHARES
FOR CASH FOR CASH PERCENTAGE
PER I-FUSION SHARE (CENTS) (CENTS) INCREASE
HEADLINE EARNINGS PER
SHARE 0,4 2,6 550%
NET TANGIBLE ASSET
VALUE PER SHARE 52,7 61,2 16%
- THE FIGURES IN THE "BEFORE" COLUMN ARE BASED ON THE AUDITED FINANCIAL
INFORMATION OF I-FUSION FOR THE YEAR ENDED 29 FEBRUARY 2000;
- THE EFFECT ON HEADLINE EARNINGS PER SHARE IS BASED ON THE ASSUMPTION THAT THE
ISSUE OF SHARES FOR CASH WAS EFFECTIVE FOR THE 12 MONTHS ENDED 29 FEBRUARY 2000
AND INCORPORATE INTEREST CALCULATED AT 7% (AFTER TAXATION); AND
- THE NET TANGIBLE ASSET VALUE PER SHARE HAS BEEN CALCULATED ON THE BASIS THAT
THE ISSUE OF SHARES FOR CASH HAD BEEN EFFECTIVE ON 29 FEBRUARY 2000.
BEFORE THE AFTER THE
ALTERNATIVE ALTERNATIVE
OFFER OFFER PERCENTAGE
PER I-FUSION SHARE (CENTS) (CENTS) INCREASE
HEADLINE EARNINGS PER
SHARE 2,6 7,0 169%
NET TANGIBLE ASSET
VALUE PER SHARE 61,2 100,0 63%
MARKET VALUE PER
I-FUSION SHARE 69,0 100,0 45%
- THE FIGURES IN THE "BEFORE" COLUMN ARE BASED ON THE "AFTER THE ISSUE OF
SHARES FOR CASH" COLUMN ABOVE;
- THE EFFECT ON HEADLINE EARNINGS PER SHARE IS BASED ON THE ASSUMPTION THAT THE
ALTERNATIVE OFFER WAS ACCEPTED AND INCORPORATE INTEREST CALCULATED AT 7% (AFTER
TAXATION);
- THE NET TANGIBLE ASSET VALUE PER SHARE HAS BEEN CALCULATED ON THE BASIS THAT
THE ALTERNATIVE OFFER WAS ACCEPTED; AND
- THE MARKET PRICE PER I-FUSION SHARE IN THE "BEFORE" COLUMN IS BASED ON THE
CLOSING I-FUSION SHARE PRICE ON 10 MAY 2000 BEING THE LAST TRADING DAY PRIOR TO
THE PUBLICATION OF THIS ANNOUNCEMENT, AND THE VALUE PER I-FUSION SHARE IN THE
"AFTER" COLUMN IS BASED ON THE ALTERNATIVE OFFER OF 100 CENTS PER SHARE.
5. CONDITIONS PRECEDENT
THE OFFERS ARE CONDITIONAL, INTER ALIA, UPON:
- THE APPROVAL OF THE OFFERS BY THE NECESSARY COMPETITION AUTHORITIES IN TERMS
OF THE COMPETITION AMENDMENT ACT NO. 35 OF 1999, IF SO REQUIRED;
- THE IMPLEMENTATION OF THE ISSUE OF SHARES FOR CASH AND THE SHARE SCHEME;
- THE APPROVAL BY I-FUSION SHAREHOLDERS IN GENERAL MEETING OF THE NECESSARY
RESOLUTIONS TO AMEND THE SHARE SCHEME; AND
- THE APPROVAL OF THE NECESSARY REGULATORY AUTHORITIES INCLUDING, INTER ALIA,
THE JOHANNESBURG STOCK EXCHANGE ("JSE") AND THE SRP.
6. UNDERTAKINGS
SHAREHOLDERS HOLDING APPROXIMATELY 18,8 MILLION (APPROXIMATELY 25%) I-FUSION
SHARES HAVE AGREED TO ACCEPT THE OFFER.
SHAREHOLDERS HOLDING APPROXIMATELY 45,0 MILLION (APPROXIMATELY 60%) I-FUSION
SHARES HAVE COMMITTED TO VOTE IN FAVOUR OF THE ISSUE OF SHARES FOR CASH TO
BIDVEST AND THE AMENDMENT TO THE SHARE SCHEME.
7. DOCUMENTATION
A FURTHER ANNOUNCEMENT SETTING OUT THE TERMS AND DATES OF THE OFFERS WILL BE
MADE IN DUE COURSE.
A CIRCULAR WHICH WILL BE SUBJECT, INTER ALIA, TO JSE AND SRP APPROVAL,
CONTAINING FULL DETAILS OF THE OFFERS AND CONVENING THE REQUIRED GENERAL
MEETING OF I-FUSION SHAREHOLDERS, IS BEING PREPARED AND WILL BE DISPATCHED TO
I-FUSION SHAREHOLDERS IN DUE COURSE.
JOHANNESBURG
15 MAY 2000
MERCHANT BANK
INVESTEC CORPORATE FINANCE
INVESTECT BANK LIMITED
(REGISTRATION NUMBER 1969/004763/06)
ATTORNEYS TO I-FUSION
WEBBER WENTZEL BOWENS
AUDITOR TO I-FUSION
KPMG
ATTORNEYS TO BIDVEST
WERKSMANS
ATTORNEYS
SPONSORING BROKERS
INVESTEC SECURITIES
INVESTEC SECURITIES LIMITED
MEMBER OF THE JOHANNESBURG STOCK EXCHANGE
REGISTRATION NO. 72/08905/06
SMITH BORKUM HARE
MERRILL LYNCH SOUTH AFRICA (PTY) LTD.
MEMBER OF THE JOHANNESBURG STOCK EXCHANGE
REGISTRATION NUMBER 1995/001805/07
SG SECURITIES (JOHANNESBURG)
(PROPRIETARY) LIMITED
REG NO 96/05841/07
MEMBER OF THE JOHANNESBURG STOCK EXCHANGE
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