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Pinnacle - Acquisition Of An Additional 15% Shareholding In Explix Technologies
(Pty) Limited
PINNACLE TECHNOLOGY HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1986/000334/06)
Share code: PNC ISIN code: ZAE000022570
("Pinnacle")
ACQUISITION OF AN ADDITIONAL 15% SHAREHOLDING IN EXPLIX TECHNOLOGIES (PTY)
LIMITED
1. Introduction
Bishop Corporate Finance (Pty) Limited is authorised to announce that Pinnacle
has entered into an agreement with ITCM Channel Management (Pty) Limited
("ITCM"), in terms of which Pinnacle will acquire 50% of ITCM"s shares in Explix
Technologies (Pty) Limited ("Explix") (representing 15% of the total issued
share capital of Explix), and 50% of ITCM"s claims against Explix (together
referred to as "additional Explix equity") ("the acquisition"). Pinnacle
currently holds 35% of the total issued share capital of Explix and the
acquisition will result in Pinnacle increasing its shareholding in Explix to
50%.
2. Rationale
Pinnacle continues its evolution to be a fully diversified ICT group, striving
to provide world-class goods and services to its client base with unsurpassed
dedication and efficiency. The acquisition of additional Explix equity assists
Pinnacle in achieving the above-mentioned goal. Explix is a high growth company.
The acquisition will unlock additional group synergies, adds to the number of
agencies and assists in the development of new products, all of which will
enhance Pinnacle"s offering to its clients.
3. Business of Explix
Explix is a focused value added Information Technology ("IT") distribution
company operating through dedicated business units and taking various best of
breed products to specific market segments. The software market is addressed
through Explix"s Workgroup division ("Workgroup"). Workgroup, as a trading
brand, is well established within the South and Southern African IT markets and
has traded successfully for the last 10 years. Workgroup is regarded as the
largest focused software distributor in South Africa servicing the IT channel
from its national branch infrastructure situated in Johannesburg, Cape Town,
Durban, Port Elizabeth and Windhoek. Other divisions within Explix include Crew,
which focuses on the retail market, Merchandise IT which performs retail
merchandising and marketing service functions on behalf of retail vendors and
Horizon, which is a newly formed business unit and has been appointed as the
Channel Development Provider for Sun Microsystems in Sub Saharan Africa.
4. Significant terms of the acquisition
4.1 Pinnacle will acquire, subject to the conditions precedent set out in
paragraph 5 below and with effect from 1 July 2004 ("effective date"), the
additional Explix equity from ITCM for a purchase consideration of R9 305
025 in aggregate, payable in cash as follows:
4.1.1 The purchase price in respect of 50% of ITCM"s claims against
Explix shall be an amount equivalent to the face value thereof,
limited to R3 169 710, payable on completion of the acquisition.
4.1.2 The purchase price in respect of 50% of ITCM"s shares in Explix
shall be paid as follows:
- R430 290 on completion of the acquisition;
- R2 163 975, or such adjusted amount as set out in paragraph
4.1.3 ("first payment"), on 30 September 2005;
- R3 541 050, or such adjusted amount as set out in paragraph
4.1.3 ("second payment"), on 30 September 2006; and
- An additional amount, if any, as set out in paragraph 4.1.3
("additional amount"), on 30 September 2006.
4.1.3 The first and second payments shall be increased, in the event
achieved by Explix for the years ending 30 June 2005 and 30 June
2006 exceed certain profit targets for those years, provided that
the first and second payments shall not exceed R3 245 962 and R 5
311 575 respectively. In the event that the net profits achieved
for the year ending 30 June 2006 exceed R15 000 000, an
additional amount calculated in terms of a formula may be payable
to ITCM.
4.1.4 The aggregate of the additional amount and the first payment
shall not exceed R3 245 962. The maximum price that may be
payable in terms of the acquisition is R12 157 537, and the
acquisition is accordingly a category 3 transaction as defined in
the JSE Securities Exchange South Africa"s Listings Requirements
("Listings Requirements").
4.2 Pinnacle shall use its best endeavours to conclude an empowerment
transaction with a suitable black economic empowerment partner which,
together with the existing black shareholders of Pinnacle, will own a
25,1% shareholding in Pinnacle.
4.3 In the event that Pinnacle, within a period of 18 months from the
effective date, concludes an agreement to acquire the 50% shareholding
in Explix that it does not already own, if so required by ITCM, it
will amend the provisions of the acquisition to mirror those of the
future transaction.
4.4 ITCM warrants to Pinnacle that they are the sole registered and beneficia
owner of the additional Explix equity, that the additional Explix equity
subject to any encumbrances and that no person will have been granted the
to acquire it. Save for these warranties provided, the acquisition has be
effected voetstoots.
5. Conditions precedent
The acquisition is subject to the fulfillment of the following conditions
precedent by 31 December 2004 (or such later date as may be agreed to in writing
between Pinnacle and ITCM):
- the other shareholders of Explix consenting to the acquisition and the
waiver by them of their pre-emptive rights in terms of the existing
shareholders" agreement to permit its conclusion and implementation;
- the conclusion of an agreement in writing between the shareholders of
Explix, amending the existing shareholders" agreement, on term and conditions
acceptable to Pinnacle;
- the conclusion of revised written employment agreements between Explix and
certain executive directors incorporating also appropriate restraint of trade
provisions;
- the release of certain executive directors as sureties for the obligations
of Explix, of inter alia to First National Bank a division of First Rand Bank
Limited, on terms and conditions acceptable to ITCM and Pinnacle; and
- the procurement of all regulatory approvals which may be required in order
to conclude and/or implement the agreement, including the approval of the
relevant competition authority under the Competition Act 1998.
6. Financial effects
The pro forma financial effects of the acquisition on the earnings, headline
earnings, net asset value and net tangible asset value of Pinnacle are not
significant (significant being defined by the Listings Requirements as less than
3%).
Johannesburg
25 October 2004
Corporate adviser Transaction Sponsor Attorneys Sponsor
Bishop Corporate Finance Deloitte TWB Grant Thornton
1. Introduction
Bishop Corporate Finance (Pty) Limited is authorised to announce that
Pinnacle has entered into an agreement with ITCM Channel Management (Pty)
Limited ("ITCM"), in terms of which Pinnacle will acquire 50% of ITCM"s
shares in Explix Technologies (Pty) Limited ("Explix") (representing 15% of
the total issued share capital of Explix), and 50% of ITCM"s claims against
Explix (together referred to as "additional Explix equity") ("the
acquisition"). Pinnacle currently holds 35% of the total issued share
capital of Explix and the acquisition will result in Pinnacle increasing
its shareholding in Explix to 50%.
2. Rationale
Pinnacle continues its evolution to be a fully diversified ICT group,
striving to provide world-class goods and services to its client base with
unsurpassed dedication and efficiency. The acquisition of additional
Explix equity assists Pinnacle in achieving the above-mentioned goal.
Explix is a high growth company. The acquisition will unlock additional
group synergies, adds to the number of agencies and assists in the
development of new products, all of which will enhance Pinnacle"s offering
to its clients.
3. Business of Explix
Explix is a focused value added Information Technology ("IT") distribution
company operating through dedicated business units and taking various best
of breed products to specific market segments. The software market is
addressed through Explix"s Workgroup division ("Workgroup"). Workgroup, as
a trading brand, is well established within the South and Southern African
IT markets and has traded successfully for the last 10 years. Workgroup is
regarded as the largest focused software distributor in South Africa
servicing the IT channel from its national branch infrastructure situated
in Johannesburg, Cape Town, Durban, Port Elizabeth and Windhoek. Other
divisions within Explix include Crew, which focuses on the retail market,
Merchandise IT which performs retail merchandising and marketing service
functions on behalf of retail vendors and Horizon, which is a newly formed
business unit and has been appointed as the Channel Development Provider
for Sun Microsystems in Sub Saharan Africa.
4. Significant terms of the acquisition
4.1 Pinnacle will acquire, subject to the conditions precedent set
out in paragraph 5 below and with effect from 1 July 2004 ("effective
date"), the additional Explix equity from ITCM for a purchase
consideration of R9 305 025 in aggregate, payable in cash as follows:
4.1.1 The purchase price in respect of 50% of ITCM"s claims
against Explix shall be an amount equivalent to the face
value thereof, limited to R3 169 710, payable on completion
of the acquisition.
4.1.2 The purchase price in respect of 50% of ITCM"s shares in
Explix shall be paid as follows:
- R430 290 on completion of the acquisition;
- R2 163 975, or such adjusted amount as set out in
paragraph 4.1.3 ("first payment"), on 30 September
2005;
- R3 541 050, or such adjusted amount as set out in
paragraph 4.1.3 ("second payment"), on 30 September
2006; and
- An additional amount, if any, as set out in paragraph 4
amount"), on 30 September 2006.
4.1.3 The first and second payments shall be increased, in the
event that the actual audited net profits after taxation
("net profits") achieved by Explix for the years ending 30
June 2005 and 30 June 2006 exceed certain profit targets for
those years, provided that the first and second payments
shall not exceed R3 245 962 and R 5 311 575 respectively. In
the event that the net profits achieved for the year ending
30 June 2006 exceed R15 000 000, an additional amount
calculated in terms of a formula may be payable to ITCM. The
aggregate of the additional amount and the first payment
shall not exceed R3 245 962. The maximum price that may be
payable in terms of the acquisition is R12 157 537, and the
acquisition is accordingly a category 3 transaction as
defined in the JSE Securities Exchange South Africa"s
Listings Requirements.
4.1.4 Pinnacle shall use its best endeavours to conclude an
empowerment transaction with a suitable black economic
empowerment partner which, together with the existing black
shareholders of Pinnacle, will own a 25,1% shareholding in
Pinnacle.
4.3 In the event that Pinnacle, within a period of 18 months from the
effective date, concludes an agreement to acquire the 50% shareholding
in Explix that it does not already own, if so required by ITCM, it will
amend the provisions of the acquisition to mirror those of the future
transaction.
4.4 ITCM warrants to Pinnacle that they are the sole registered and
beneficial owner of the additional Explix equity, that the additional
Explix equity is not subject to any encumbrances and that no person will
have been granted the right to acquire it. Save for these warranties
provided, the acquisition has been effected voetstoots.
5. Conditions precedent
The acquisition is subject to the fulfillment of the following conditions
precedent by 31 December 2004 (or such later date as may be agreed to in
writing between Pinnacle and ITCM):
- the other shareholders of Explix consenting to the acquisition and the
waiver by them of their pre-emptive rights in terms of the existing
shareholders" agreement to permit its conclusion and implementation;
- the conclusion of an agreement in writing between the shareholders of
Explix, amending the existing shareholders" agreement, on term and
conditions acceptable to Pinnacle;
- the conclusion of revised written employment agreements between Explix
and certain executive directors incorporating also appropriate
restraint of trade provisions;
- the release of certain executive directors as sureties for the
obligations of Explix, of inter alia to First National Bank a division
of First Rand Bank Limited, on terms and conditions acceptable to ITCM
and Pinnacle; and
- the procurement of all regulatory approvals which may be required in
order to conclude and/or implement the agreement, including the
approval of the relevant competition authority under the Competition
Act 1998.
6. Financial effects
The pro forma financial effects of the acquisition on the earnings,
headline earnings, net asset value and net tangible asset value of Pinnacle
are not significant (significant being defined by the JSE Securities
Exchange South Africa"s Listings Requirements as less than 3%).
Johannesburg
25 October 2004
Corporate adviser Transaction Sponsor Attorneys Sponsor
Bishop Corporate Finance Deloitte TWB Grant Thornton
Date: 25/10/2004 07:00:13 AM Supplied by www.sharenet.co.za
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