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BVT - Bidvest - Acquisition By Bidvest Of Nowaco And Farutex From JPMorgan
Partners And Bancroft Private Equity
THE BIDVEST GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1946/021180/06)
Share code: BVT ISIN: ZAE000117321
("Bidvest")
ACQUISITION BY BIDVEST OF NOWACO AND FARUTEX FROM JPMORGAN PARTNERS AND
BANCROFT PRIVATE EQUITY
1. Introduction
Bidvest announces that it has entered into an agreement in terms of
which it will acquire 100% of the issued share capital of Nowaco Czech
Republic s.r.o ("Nowaco"), a company incorporated in Czech Republic and
100% of the issued share capital of Farutex Sp.zo.o ("Farutex"), a
company incorporated in Poland (collectively "the Nowaco Group"), from
funds affiliated with JPMorgan Partners and managed by CCMP Capital
Advisors LLC, and from Bancroft Private Equity L.L.P ("the vendors"),
subject to the fulfilment of the condition precedent referred to in
paragraph 5 below ("the acquisition").
2. History and nature of business
The Nowaco Group is the number one delivered wholesaler to the
foodservice and independent retail markets in Central and Eastern
Europe. Nowaco focuses on the Czech Republic and Slovakia while
Farutex serves the Polish market.
The Nowaco Group`s core business is sourcing and distributing a broad
multi-temperature product range comprising approximately 6,800 stock
keeping units to 42,000 delivery addresses, making on average 8,300
deliveries per day. The Nowaco Group`s diverse base of customers
operates across the commercial (hotels, restaurants and cafeterias) and
institutional (school, business and public catering) foodservice
sectors as well as in the independent retail sector.
Nowaco`s delivered wholesale business is supplemented by two
proprietary heritage consumer brands, NOWACO and Prima, with category
leadership in frozen food and ice cream. The two brands have secured
Nowaco a key position in supplying the international retail and
hypermarket sectors in the Czech Republic and Slovakia, where it is
viewed as the local champion and commands strong brand loyalty.
3. Rationale
The acquisition of the Nowaco Group will complement the existing
international foodservice business of Bidvest in the United Kingdom,
Europe, Australia, New Zealand and Asia. Central and Eastern Europe
represents a strategic market with growth opportunities. A presence
here will enable Bidvest to continue expanding its international
interests in the foodservice industry with the objective of developing
a leading global foodservice business. The acquisition provides a
unique opportunity to acquire market-leading Central and Eastern
European foodservice businesses, creating potential customer and
purchasing synergies. Nowaco Group is a consistently highly profitable
business with a strong management team and provides Bidvest with a
foothold and entry point into the broader Central and Eastern European
markets.
The acquisition represents a compelling investment proposition
underpinned by the following key attractions:
- Large addressable markets with substantial growth potential;
- Broad leadership positions in fragmented markets;
- Resilient business model;
- Excellent financial track-record;
- Experienced and proven local management teams;
- Multiple revenue growth opportunities; and
- Platform and industry consolidation.
Bidvest believes that the Nowaco Group as part of the Bidvest
foodservices division, with Bidvest`s management focus, can be expected
to contribute significantly to Bidvest Group performance over time.
4. Salient terms of the acquisition
Bidvest will purchase 100% of the issued shares in the Nowaco Group
from the vendors for an enterprise value consideration of Euro250
million cash and debt free. The acquisition will be initially funded
from existing banking facilities of Bidvest which will ultimately be
converted into a mix of debt and equity. Management of each business
have committed to acquiring between 5% and 10% of the companies
subsequent to completion.
The vendors have given limited warranties, which are usual in a
transaction of this nature.
5. Condition Precedent
The acquisition is subject to the receipt of European Union competition
clearance.
6. Effective date of the acquisition
The effective date of the acquisition is expected to be in the third
quarter of 2009, once European Union competition clearance is obtained.
7. Financial effects of the acquisition
The table below sets out the pro forma financial effects of the
acquisition for the six-month period ended December 31 2008. This is
provided for illustrative purposes only.
Published Pro Increase / Difference
before forma (decrease) %
after
Earnings per share (cents) 530.4 537.0 6.6 1.2%
Headline earnings per share 454.0 472.9 18.9 4.2%
(cents)
Net asset value per share 4,384.6 4,637.8 253.2 5.8%
(cents)
Net tangible asset value per 2,880.4 2,572.4 (308.0) -10.7%
share (cents)
Number of shares in issue 300.887 314.108
(million)
Weighted average number of 300.514 307.125
shares (million)
The "Pro forma after" column assumes that:
- the acquisition was implemented with effect from July 1 2008 to
determine the earnings and headline earnings financial effects and at
December 31 2008 to determine the net asset value and tangible net
asset value financial effects;
- the financial effects have been determined using Nowaco Group`s pro
rata earnings for the six months to December 31 2008 based on the
actual earnings of Nowaco Group for the year ended December 31 2008
and a tangible net asset value of approximately Euro72 million;
- an exchange rate of R11,0 / Euro1 was applied to convert the financial
results of the Nowaco Group to Rand; and
- the acquisition has been funded 50% by debt and 50% through equity
raised at an average price of R104,00 per Bidvest share; and
- an average Euro interest rate of 6.5% per annum before tax for the six
months ended December 31 2008 was paid on the loan indebtedness.
8. Categorisation of the acquisition
The acquisition is a Category 2 transaction in terms of the JSE
Listings Requirements. In addition, in terms of section 9.16 of the JSE
Listings Requirements, the acquisition will result in Nowaco and
Farutex becoming a subsidiary company of Bidvest and accordingly the
articles of association of both companies will be amended to conform to
schedule 10 of the JSE Listings Requirements.
By order of the Board
Johannesburg
August 3 2009
Transaction advisor Legal advisory Financial
Diligence
HSBC Bank plc Baker & McKenzie LLP Deloitte
Investment Bank and Sponsor South African Legal
advisory
Investec Bank Limited Edward Nathan
Sonnenbergs Inc
Date: 03/08/2009 07:36:01 Supplied by www.sharenet.co.za
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