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UTR/SHF - Unitrans/ Steinhoff - Disposal and Withdrawal of Cautionary
Unitrans Limited
(Incorporated in the Republic of South Africa)
(Registration Number 1967/003403/06)
Share code: UTR & ISIN: ZAE000007670
("Unitrans" or "the company")
Steinhoff International
(Incorporated in the Republic of South Africa)
(Registration Number 1998/003951/06)
Share code: SHF & ISIN: ZAE000016176
("Steinhoff")
- Disposal by Unitrans of its entire business as a going concern to a
subsidiary of Steinhoff ("Steinhoff Newco") in exchange for Steinhoff
Newco shares;
- distribution in specie to Unitrans shareholders of shares in Steinhoff
Newco and the subsequent exchange of Steinhoff Newco shares for
Steinhoff shares; and
- withdrawal of cautionary announcement
1. INTRODUCTION
1.1. On 19 February 2007, Steinhoff, through a subsidiary ("Steinhoff
Newco"), made an offer to Unitrans to acquire from Unitrans its entire
business as a going concern ("the offer"). The acquisition will
provide for Unitrans shareholders, other than Steinhoff Africa
Holdings (Pty) Ltd ("Steinhoff Africa") (collectively "Unitrans
minority shareholders") to ultimately obtain Steinhoff shares ("the
transaction"). Steinhoff Africa currently owns 60,76% of the issued
share capital of Unitrans.
1.2. The transaction will have the effect that Unitrans minority
shareholders will receive 2 Steinhoff shares for each Unitrans share
held on a record date to be determined ("the share exchange").
1.3. Steinhoff is a holding company, listed on the JSE Limited ("JSE") and
is invested predominantly in the household goods and related
industries. Steinhoff is a global lifestyle supplier that
manufactures, warehouses and distributes household goods.
1.4. Unitrans is a diversified transport, distribution and logistics group,
also listed on the JSE and active in freight and passenger transport,
warehousing, break bulk services, distribution and logistics services,
vehicle retailing, fleet management, vehicle leasing, financing and
insurance and car rental ("the Unitrans business").
2. THE DISPOSAL, DISTRIBUTION OF NEWCO SHARES AND THE SHARE EXCHANGE
2.1. Steinhoff and Unitrans have reached agreement, subject to the
conditions precedent set out in paragraph 4 below, in terms of which
Unitrans will dispose of the Unitrans business as a going concern to
Steinhoff Newco, by means of a disposal as contemplated in section 228
of the Companies Act, 1973, as amended ("the Companies Act") ("the
disposal").
2.2. Based on the current issued share capital of Unitrans, Steinhoff Newco
will, as purchase consideration for the Unitrans business, issue 89
331 988 shares in Steinhoff Newco at an issue price equal to the
market value of a Unitrans share as at the effective date, being the
second business day after fulfilment of the last of the conditions
precedent set out in paragraph 4 below.
2.3. Unitrans will, subject to the fulfilment of the conditions precedent,
by way of a distribution in terms of section 90 of the Companies Act,
distribute the Steinhoff Newco shares to Unitrans shareholders
(including Steinhoff Africa) on a record date to be determined ("the
record date"), pro rata to their Unitrans shareholdings ("the
distribution"). The distribution will consist of both a capital
reduction and payment of a dividend in specie.
2.4. In terms of the share exchange, Unitrans minority shareholders will,
after the distribution, be obliged to dispose of their Steinhoff Newco
shares to Steinhoff in exchange for the issue of Steinhoff shares,
credited as fully paid, in the ratio of 2 Steinhoff shares for each
Steinhoff Newco share exchanged. Due to Steinhoff Africa not
participating in the share exchange, only 76 268 060 new Steinhoff
shares will be issued ("the Steinhoff consideration shares"), 10 139
998 of which Steinhoff shares will be retained as treasury shares
within the current subsidiary of Unitrans which holds 5 069 999
Unitrans treasury shares. The effective purchase consideration payable
by Steinhoff for that portion of the Unitrans business not already
owned by it thus amounts to R1 665 104 601 on the basis of the volume
weighted average price ("VWAP") per Steinhoff share of 2 518 cents per
share.
2.5. The collective shareholding of Unitrans minority shareholders in
Steinhoff after the share exchange will be 5,1%, after including the
effect of the Homestyle Group plc ("Homestyle") minority scheme of
arrangement pursuant to which Homestyle became a wholly-owned
subsidiary of Steinhoff with effect from 19 February 2007.
2.6. Each of the components of the transaction, i.e. the disposal,
distribution and share exchange, form part of an indivisible
transaction. Salient dates relating to the distribution and share
exchange will be set out in the circular to Unitrans shareholders
referred to in paragraph 7 below.
2.7. After the transaction, Unitrans will own no assets and will not be
eligible for a continued listing in terms of the Listing Requirements
of the JSE ("the Listing Requirements"). As a consequence, it is
intended that the listing of Unitrans on the JSE be terminated and
that the company be liquidated in due course.
3. RATIONALE
3.1. The Unitrans business is faced with limited acquisitive growth
prospects in the South African market. The transaction presents to
Unitrans the possibility of off-shore expansion, utilising the current
offshore presence, experience and financing capabilities of Steinhoff.
3.2. Other benefits include:
3.2.1. optimisation of logistics synergies in terms of intra-group
opportunities which can better be achieved as a single group, e.g. PG
Bison, Timbercity, Pennypinchers, Homestyle and Steinhoff Asia
Pacific;
3.2.2. Unitrans` motor retail interests fit in with Steinhoff`s strategy and
complement its existing retail interests;
3.2.3. critical mass considerations in respect of complementary property
portfolios and therefore increased access to finance on more
appropriate terms;
3.2.4. complementary management skills and business acumen, as well as
reciprocal enhancement of management depth and succession; and
3.2.5. elimination of duplicated structures and sharing of infrastructure.
3.3. Due to its limited free-float and, hence, tradability, Unitrans has
limited access to equity capital / vendor consideration opportunities
to fund growth on appropriate terms, and consequently a separate
listing is not justified.
4. CONDITIONS PRECEDENT
The disposal, distribution and share exchange are subject to:
4.1. the conclusion of the relevant purchase and sale agreements emanating
from the offer;
4.2 the approval of Unitrans minority shareholders in general meeting
("the general meeting");
4.3. the approval by the JSE and the Securities Regulation Panel of the
required circular to Unitrans shareholders;
4.4. the adoption by Unitrans shareholders of a special resolution, and the
registration thereof, for the liquidation of Unitrans subsequent to
the share exchange occurring;
4.5. the approval of the Unitrans bond holders to the extent required;
and
4.6. the JSE granting a listing of the Steinhoff consideration shares to be
issued in terms of the share exchange.
5. FINANCIAL EFFECTS
5.1. Financial effects of the transaction on Steinhoff
Notwithstanding its strategic importance to Steinhoff, the
transaction will not have a significant effect on Steinhoff`s
earnings, headline earnings, net asset value and net asset value (as
adjusted for the elimination of goodwill) per share.
5.2. Financial effects of the transaction on a Unitrans shareholder
Based on the audited financial statements of Unitrans and Steinhoff
for the year ended 30 June 2006 and on the assumption that the share
exchange had been in effect on that date, the effects of the
transaction on a Unitrans minority shareholder holding 100 Unitrans
shares would have been as follows:
Before After
(100 (200
Unitrans Steinhoff
shares) shares) %
Note (R) (R) Change
Attributable:
- market value 1 4 976,00 5 059,28 1,7
- earnings 2 380,80 333,40 (12,4)
- headline earnings 2 405,50 347,60 (14,3)
- net asset value 3 2 171,00 1 913,20 (11,9)
- net asset value adjusted 3 1 878,80 1 517,40 (19,2)
for the elimination of
goodwill
Notes:
1. The "Before" column represents Unitrans`s VWAP up to 6 February 2007
(4 976 cps) attributable to 100 Unitrans shares. The "After" column
reflects the pro forma market value attributable to 200 Steinhoff
shares arrived at on the basis of Steinhoff`s pro forma "After" HEPS,
capitalised at its implied price earnings multiple applicable to its
VWAP over the same period and its historically reported HEPS (173 cps)
for the year ended 30 June 2006.
2. The "Before" column represents Unitrans`s Earnings and Headline
Earnings for the year ended 30 June 2006 attributable to 100 Unitrans
shares. The "After" column reflects the pro forma Earnings and
Headline Earnings of Steinhoff attributable to 200 Steinhoff shares on
the assumption that the share exchange was in effect throughout that
financial year.
3. The "Before" column represents the Net Asset Value ("NAV") and Net
Asset Value adjusted for the elimination of goodwill ("TANAV")
attributable to 100 Unitrans shares as at 30 June 2006 (restated at 31
December 2006), whereas the "After" column represents the pro forma
NAV and TANAV of Steinhoff as at that date, adjusted for the share
exchange, attributable to 200 Steinhoff shares, on the assumption that
the transaction became effective on 30 June 2006.
6. INDEPENDENT ADVICE, RECOMMENDATION AND VOTING
6.1. The transaction constitutes an "affected transaction" in terms of the
rules of the Securities Regulation Code on Take-overs and Mergers
("the Code"). In addition, the transaction constitutes a related party
transaction in terms of Section 10 of the Listing Requirements.
Accordingly, the Code and the Listing Requirements require the
directors of Unitrans to obtain independent advice on the fairness and
reasonableness of the terms of the transaction to Unitrans
shareholders.
6.2. The Board of Unitrans established a committee of the Board, comprising
independent non-executive directors of the Board, to consider a
proposal which preceded the offer. The independent committee appointed
PricewaterhouseCoopers Corporate Finance (Pty) Limited ("PwC") to
advise the independent committee whether the terms of the transaction
are fair and reasonable to Unitrans shareholders. PwC completed a
preliminary valuation of Unitrans and review of Steinhoff as at 6
February 2007 and has advised the independent committee that the terms
of the transaction are fair and reasonable to Unitrans ordinary
shareholders as at that date. PwC`s opinion will be formalised and
finalised at the last practicable date prior to the publication of the
circular to Unitrans shareholders referred to in paragraph 7 below and
will be based on financial, regulatory, securities market and other
conditions prevailing at that time.
6.3. Based on PwC`s preliminary advice, but subject to receipt of a final
fair and reasonable opinion from PwC, the independent committee of the
board unanimously recommends that Unitrans minority shareholders
support the transaction by voting in favour of the Unitrans
shareholder resolutions required to implement the disposal and the
distribution and the directors of Unitrans, where applicable and to
the extent permissible in terms of the Code and the Listing
Requirements, undertake to vote their own Unitrans shares in favour of
such resolutions. PwC`s written opinion will be contained in the
circular referred to in paragraph 7 below.
6.4. Steinhoff Africa and its associates will not be permitted to vote at
the general meeting.
6.5. Unitrans minority shareholders currently holding approximately 60% of
the Unitrans shares that may be voted at the general meeting have
indicated that they intend voting in favour of the resolutions to be
proposed at the general meeting.
7. CIRCULAR TO UNITRANS SHAREHOLDERS AND GENERAL MEETING
A circular setting out the detailed terms of the transaction and convening the
general meeting to approve such is in the process of being finalised and
will be posted to Unitrans shareholders within 28 days of this announcement
or within such longer period as the JSE and the SRP may allow in the
circumstances.
8. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Unitrans shareholders are referred to the cautionary announcement by Unitrans
dated Friday, 24 November 2006 and its renewal on 4 January 2007. The
cautionary notice is no longer required and is hereby withdrawn.
Johannesburg
21 February 2007
Corporate adviser and sponsor
PSG Capital
Legal adviser
Cliffe Dekker
Independent adviser
PricewaterhouseCoopers
Corporate Finance (Pty) Ltd
(Registration number 1970/003711/07)
Date: 21/02/2007 15:23:00 Supplied by www.sharenet.co.za
Produced by the JSE SENS Department.
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