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SHF - Steinhoff - Acquisition certain of the businesses of Geros

Release Date: 15/12/2006 12:05
Code(s): SHF
Wrap Text

SHF - Steinhoff - Acquisition certain of the businesses of Geros STEINHOFF INTERNATIONAL HOLDINGS LIMITED (Incorporated in the Republic of South Africa) (Registration Number 1998/003951/06) Share code: SHF & ISIN: ZAE000016176 ("Steinhoff" or "the Group") ACQUISITION BY STEINHOFF AFRICA HOLDINGS (PROPRIETARY) LIMITED ("Steinhoff Africa") OF CERTAIN OF THE BUSINESSES OF GEROS BETEILIGUNGSVERWALTUNG GmbH ("Geros") 1. BACKGROUND 1.1 An agreement has been entered into on 13 December 2006 between, inter alia, Steinhoff Africa and Geros ("the agreement") in terms of which Steinhoff Africa will acquire the shares in and claims against or businesses of certain operating companies of Geros (collectively, "the Geros businesses"), ("the acquisition"). 1.2 The Geros businesses are involved in wire drawing and the manufacturing and distribution of bedding springs and components. 1.3 Geros is controlled by Daun et Cie AG, a company controlled by Mr Claas Daun, a non-executive director of Steinhoff. 2. THE ACQUISITION 2.1 In terms of the agreement, which is subject to the conditions precedent set out in 5, the purchase consideration payable amounts to R169,8 million of which approximately R19,4 million in cash ("the contingent consideration") will remain outstanding pending the achievement of a profit warranty in respect of one of the Geros businesses. 2.2 Accordingly, the net purchase consideration of R150,4 million, will be settled by the issue of 6 396 405 Steinhoff shares ("the Steinhoff consideration shares") at an issue price of R23,51 per share, being the closing market price of Steinhoff shares on 12 December 2006. 2.3 The Steinhoff consideration shares accruing to the executive management of the Geros businesses in respect of their current shareholdings in the Geros businesses, will be subject to three-year sales restrictions with effect from the implementation date, whereafter they may be dealt with in three equal tranches over three years. 2.4 In the event of the profit warranty referred to in 2.1 above being achieved by not later than 31 December 2008, the contingent consideration will be payable, free of interest, in cash. Failing the profit warranty being achieved by 31 December 2008, the contingent consideration and Steinhoff`s obligations in respect thereof, will lapse. 3. RATIONALE FOR THE ACQUISITION AND PROSPECTS OF THE GEROS BUSINESSES The Geros businesses complement Steinhoff Africa`s existing raw materials interests which currently produce foam and textiles mainly for the furniture manufacturing industry. Accordingly, the acquisition will expand the product offering of raw materials and components of Steinhoff Africa`s Raw Materials division in line with Steinhoff`s composition as a diversified industrial group in southern Africa. The Geros businesses, under Steinhoff`s control, will also benefit from significant synergies which are prevalent in areas such as raw material sourcing (e.g. steel and plastic), distribution and logistics and export growth of components and springs through Steinhoff`s international contacts and networks. 4. FINANCIAL EFFECTS FOR STEINHOFF Although the pro forma effects of the acquisition on Steinhoff`s earnings, headline earnings, net asset value and tangible net asset value per share are immaterial due to the relative small size of the Geros businesses, the strategic importance of the acquisition is expected to benefit the Group in future. 5. CONDITIONS PRECEDENT 5.1 The acquisition is subject to the fulfilment of, inter alia, the following conditions precedent: 5.1.1 the JSE Limited ("the JSE") granting a listing of the Steinhoff consideration shares; 5.1.2 the approval of the acquisition by the Competition Authorities, to the extent required; and 5.1.3 the approval of the acquisition by the Exchange Control Department of the South African Reserve Bank, to the extent required. 6 RELATED PARTY TRANSACTION AND INDEPENDENT FAIR AND REASONABLE OPINION The consideration constitutes more than 0,25% but less than 1% of Steinhoff`s market capitalisation and, consequently, neither Steinhoff shareholder approval nor a circular to Steinhoff shareholders is required. However, as the acquisition constitutes a "small related party transaction" as defined in section 10 of the JSE Listings Requirements, a "fair and reasonable" opinion from an independent expert is required. PriceWaterhouseCoopers has been appointed in this regard and the company will make a further announcement on SENS once the opinion has been approved by the JSE. Johannesburg 15 December 2006 Sponsor PSG Capital Independent Adviser PWC Corporate Finance (Pty) Limted Date: 15/12/2006 12:05:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department.

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