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FWD - Freeworld Coatings Limited - Freeworld board response to Competition

Release Date: 21/04/2011 14:03
Code(s): FWD
Wrap Text

FWD - Freeworld Coatings Limited - Freeworld board response to Competition Commission ruling FREEWORLD COATINGS LIMITED (Incorporated in the Republic of South Africa) Registration number 2007/021624/06 Share code: FWD ISIN: ZAE000109450 ("Freeworld" or the "Company") FREEWORLD BOARD RESPONSE TO COMPETITION COMMISSION RULING IN RESPECT OF THE OFFER BY KANSAI PAINT CO LIMITED ("KANSAI") TO ACQUIRE ALL THE SHARES IN FREEWORLD AT A PRICE OF R12 PER SHARE ("KANSAI OFFER" OR THE "TRANSACTION") The Freeworld board ("Board") has considered and accepts the Competition Commission`s conditional approval of the Kansai offer. The Board has at no stage sought to oppose the transaction and indeed in the circular to shareholders dated 17 January 2011 (the "Freeworld circular") and on numerous occasions stated in clear language that the price of R12.00 per share is fair and reasonable. From the earliest contact with Kansai the Board has had a set of concerns about the Kansai offer relating to competition and public interest issues in terms of the Competition Act. These areas of concern were set out in the Freeworld circular to shareholders. The Board had a duty to raise these concerns with the competition authorities. The conditions imposed by the Competition Commission deal comprehensively with these concerns, both in terms of the risk of unilateral and coordinated (market) action, as well as concerns regarding employment, the extent of local manufacture and original research and development. The risk of unilateral and coordinated action is avoided by the ordered divestiture by the merged entity of Freeworld`s entire automotive interests and the conditions relating to certain potential arrangements with PPG Industries Inc. in South Africa. Each of the public interest concerns has been addressed with explicit conditions preserving employment, local manufacture, and research and development. In addition the Competition Commission has also imposed the condition that Kansai establish OEM automotive coatings facilities in South Africa within 5 years (absent unforeseen circumstances). The Board is fully satisfied that it has discharged its duties as a corporate citizen, and that the transaction, on the basis on which it was approved by the Competition Commission is consistent with national law, and thus Freeworld will not appeal the Competition Commission decision. The Board is gratified that Kansai has accepted the conditions imposed by the Competition Commission and that shareholders will now receive the offer price of R12 for their shares. The Board will do all in its power to ensure that the transaction is completed promptly and smoothly on the basis of the conditions imposed by the Competition Commission. To this end the Board will be meeting with Kansai early next week to understand their position as the incoming controlling shareholder and to cooperate in such completion. Johannesburg 21 April 2011 Merchant bank and sponsor to Freeworld RAND MERCHANT BANK (a division of FirstRand Bank Limited) Attorneys to Freeworld Read Hope Phillips Thomas & Cadman Incorporated Competition law advisors to Freeworld Nortons Inc. Date: 21/04/2011 14:03:58 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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