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AVI - AVI Limited - Acquisition of Green Cross Manufacturers Proprietary Limited, Green Cross Retail Holdings Proprietary Limited and Green Cross Properties Proprietary Limited by Avi AVI Limited (Incorporated in South Africa) (Registration number: 1944/017201/06) ISIN Code: ZAE000049433 JSE Code: AVI ("AVI" or "the Group") VOLUNTARY ANNOUNCEMENT ACQUISITION OF GREEN CROSS MANUFACTURERS PROPRIETARY LIMITED, GREEN CROSS RETAIL HOLDINGS PROPRIETARY LIMITED AND GREEN CROSS PROPERTIES PROPRIETARY LIMITED ("GREEN CROSS" OR "THE BUSINESS") BY AVI 1.INTRODUCTION Shareholders are advised that AVI has entered into an agreement in terms of which it will acquire 100% of the issued share capital and shareholders` loans of Green Cross ("the Transaction" or "the Acquisition"). The Transaction is not a categorised transaction in terms of the Listings Requirements of the JSE Limited. 2. RATIONALE Since the acquisition of A&D Spitz Proprietary Limited ("Spitz") in July 2005, AVI`s premium branded footwear and apparel portfolio has contributed meaningfully to the Group`s growth in profitability. The Transaction represents a rare opportunity to acquire an established, category leading brand of relevant scale with a solid record of profitable operations. Salient to the Transaction are the following: * The opportunity to acquire South Africa`s leading comfort footwear brand. * The opportunity to substantially increase the scale and profitability of Green Cross` operations through increased brand focus, product innovation, enhanced consumer messaging and greater investment in both the business` retail and wholesale operations. * The opportunity for medium term synergistic margin extraction through utilisation of the AVI and Spitz shared services infrastructures. * The opportunity to introduce the credit and loyalty programmes offered at Spitz and Kurt Geiger at Green Cross. * The retention of key Green Cross executives which will provide AVI with skills continuity for an appropriate period. 3.INFORMATION ON GREEN CROSS Green Cross was founded in 1975 and is a vertically integrated manufacturer, importer and retailer of ladies, men`s and children`s footwear in South Africa and surrounding geographies. All of the business` sales are made under the "Green Cross" brand which is owned by Green Cross in South Africa and several other jurisdictions. Green Cross has production facilities located in Epping, Cape Town, and retails its products through a network of 30 retail outlets situated across South Africa. In addition to Green Cross` retail operations, wholesale sales are made through a network of third party retailers, distributors and agents and accounted for approximately 48% of consolidated turnover in Green Cross` last financial year. Green Cross` consolidated results for its financial year ending 29 February 2012 were: R`m Revenue 300,6 Operating profit 70,0 Operating profit after taxation 50,4 of 28% 4.PARTICULARS OF THE TRANSACTION i.PURCHASE CONSIDERATION The purchase consideration payable by AVI will be an initial amount of R382.5 million plus a contingent earn-out payment up to a maximum amount of R35 million, payable in March 2013 subject to certain profit hurdles being achieved in Green Cross` financial year ending 28 February 2013. AVI will discharge the initial amount of the purchase consideration in a single cash payment to the vendors. AVI will fund the entire purchase consideration from existing cash resources. ii.EFFECTIVE DATE The transaction`s effective date is 1 March 2012. iii.CONDITIONS PRECEDENT The transaction is subject to the fulfilment of certain conditions precedent including the receipt by the parties of the unconditional approval of the South African Competition Authorities in terms of the Competition Act no. 89 of 1998, as amended, and the receipt by the parties of the written consent of certain landlords in respect of the transfer of certain leases over premises utilised by Green Cross in its retail operations. 5. CONCLUSION AVI`s board of directors believes that the Transaction is strongly aligned to the Group`s strategy of growing great brands and that the addition of this leading brand with a solid track record and exciting future growth opportunities will allow AVI to further capitalise on its expertise in the premium branded footwear category. Further details relating to the Transaction will be communicated at the Group`s year-end results presentation to be held during September 2012. 17 May 2012 Illovo, Johannesburg Sponsor The Standard Bank of South Africa Limited Legal advisor to Green Cross Bernadt Vukic Potash & Getz Legal advisor to AVI Tabacks Date: 17/05/2012 14:12:01 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.
