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SHF - Steinhoff - Proposed Merger Of Steinhoff Africa And Amaps

Release Date: 14/12/2006 15:50
Code(s): SHF
Wrap Text

SHF - Steinhoff - Proposed Merger Of Steinhoff Africa And Amaps STEINHOFF INTERNATIONAL HOLDINGS LIMITED (Incorporated in the Republic of South Africa) (Registration Number 1998/003951/06) Share code: SHF & ISIN: ZAE000016176 ("Steinhoff") PROPOSED MERGER OF THE SOUTH AFRICAN FURNITURE MANUFACTURING INTERESTS OF STEINHOFF AFRICA HOLDINGS (PROPRIETARY) LIMITED ("Steinhoff Africa") WITH THE BUSINESS OF AMALGAMATED APPLIANCE HOLDINGS LIMITED ("Amap") AND INTRODUCTION OF BLACK ECONOMIC EMPOWERMENT ("BEE") AS WELL AS MANAGEMENT INVESTMENT INTO AMAP 1. BACKGROUND 1.1 Steinhoff currently holds, indirectly via Steinhoff Africa, 26,7% of the issued ordinary shares of Amap. 1.2 An agreement in principle has been entered into between Steinhoff Africa and Amap ("the agreement") to merge the furniture
manufacturing interests of Steinhoff Africa ("the Steinfurn business") with the business of Amap ("the merger") whilst simultaneously introducing BEE and management investors into the merged business.
1.3 Amap has further entered into separate negotiations with a leading international white goods company regarding the potential acquisition of its southern African interests. 2. THE MERGER 2.1 In terms of the agreement, Steinhoff Africa, subject to the conditions precedent set out in 2.3, will dispose of the Steinfurn business to Amap for a consideration of R1 152 million ("the consideration"), effectively in exchange for the issue of
ordinary shares in AMAP at 491 cents per share and an appropriate debt instrument. The merger values for Amap and Steinfurn have been calculated on a relative basis wherein similar ratings and valuation metrics were applied to both Amap and Steinfurn.
2.2 Steinhoff Africa`s shareholding in the enlarged Amap will be approximately 30% after the introduction of BEE and management investors, who will hold a meaningful interest in the enlarged Amap.
3. STRATEGIC RATIONALE FOR STEINHOFF By merging the Steinfurn business with Amap, the combined business` growth prospects will be enhanced considerably as a result of the synergies, critical mass considerations and a
broader spread of complementary products on offer. As a result of the ownership structure of the merged entity that will include meaningful BEE, it is also envisaged that increased support from a procurement point of view will be forthcoming from Amap`s
customer bases. Accordingly, Amap, as reconstituted after the merger, will be a sizeable, focused household goods supplier, which, in turn, stands to benefit all Amap stakeholders, including Steinhoff Africa as a minority shareholder.
4. RATIONALE FOR THE MERGER AND PROSPECTS OF THE MERGED BUSINESS The merger will create a significant local household goods supplier with a complementary product offering ranging from consumer electronics and small domestic appliances to household goods , furniture and white goods. Substantial benefits arising from the synergies and scale are expected to be derived from the combined sourcing, warehousing, distribution and logistics activities, as well as shared infrastructure, all of which are expected to favourably impact on Amap`s future earnings and headline earnings per share. In addition, the merger will facilitate the combination of complementary management skills and business acumen and will enhance, reciprocally, management depth and succession planning, as well as facilitating meaningful BEE participation. 5. CONDITIONS PRECEDENT The merger is subject to fulfilment of the following conditions precedent: 5.1 the approval of the merger by Amap shareholders, other than Steinhoff Africa, in general meeting; 5.2 the JSE Limited ("the JSE") granting a listing of the Amap consideration shares;
5.3 the approval of the merger by the Competition Authorities, to the extent required; and 5.4 The merger consideration constitutes approximately 4,2% of Steinhoff`s market capitalisation and, consequently, neither
Steinhoff shareholder approval nor a circular to Steinhoff shareholders is required. 5.5 In respect of Amap, the merger constitutes both a category 1 and a related party transaction in terms of the JSE Listings
Requirements and, consequently, Amap shareholder approval, other than Steinhoff Africa, and a circular to Amap shareholders, containing revised Listing particulars, is required. In addition, a "fair and reasonable" opinion to Amap shareholders is
required and Bridge Capital Advisors (Pty) Ltd has been appointed in this regard. Their opinion will be included in the relevant circular to Amap shareholders. Johannesburg 14 December 2006 Sponsor PSG Capital Date: 14/12/2006 15:50:06 Supplied by www.sharenet.co.za Produced by the JSE SENS Department.

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