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Massmart - Acquisition Of Furnex Businesses

Release Date: 18/12/2001 17:35
Code(s): MSM
Wrap Text
Massmart Holdings Limited
(Registration number 1940/014066/05)
("Massmart")
ISIN: ZAE000029534          JSE Share code: MSM
ACQUISITION OF FURNEX BUSINESSES

Massmart is pleased to announce the acquisition of the business of Furnex Stores (Pty) Limited, including the shares in Furnex Dealers Indemnity (Pty) Limited, with effect from 1 January 2002. The transaction is subject to certain suspensive conditions, including the approval of the transaction by the members of Furnex Capital, the Competitions Commission and the signing by management of service contracts and restraint agreements.
The Furnex business to be acquired acts as a wholesale supplier of
appliances, hi-tech, bedding and cellphone equipment to 384 independent furniture dealers throughout Southern Africa and in the year to September achieved sales throughput of R474million.
The acquisition satisfies all Massmart's strategic and acquisition criteria and builds on the Groups demonstrated competence in the acquisition,
integration and enhancement of entrepreneurially founded businesses trading in product categories similar to Massmart.
The Furnex business model is identical to Massmart's Shield business. In due course both will be incorporated into a new division, where synergies will be explored and realised. It is anticipated that this structure will create value for shareholders and Furnex dealers, in addition to that created by Massmart's expertise in the procurement, ranging and marketing of General Merchandise. Due to the mainly peri-urban location of Furnex dealers and a differing customer and merchandise profile, there is little overlap with Makro, Dion and Game.
The purchase price, to be funded from Massmart's own resources, is R44.5 million.
In the year to September 2001, the businesses to be acquired produce a Profit before tax of approximately R11.3 million and are budgeting to produce a Profit before tax of R17 million in the year to 31 March 2003. The effect of the acquisitions on Massmart's earnings for the year to June 2002 is expected to be positive, but not material. Sandton 18 December 2001 Sponsor UBS Warburg

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