Wrap Text
THE MERGING OF THE AGRICULTURAL RETAIL AND PARTRITE BUSINESSES OF AFGRI OPERATIONS LIMITED
AFGRI Limited
(Incorporated in the Republic of South Africa)
Registration Number: 1995/004030/06
ISIN: ZAE000040549
JSE share code: AFR
("AFGRI" or "the Company")
THE MERGING OF THE AGRICULTURAL RETAIL AND PARTRITE BUSINESSES OF AFGRI
OPERATIONS LIMITED ("AFGRI OPERATIONS") WITH THE AGRICULTURAL RETAIL
BUSINESS OF SENWES LIMITED ("SENWES")
INTRODUCTION
Shareholders are advised that AFGRI Operations, a wholly owned subsidiary of the Company,
and Senwes have entered into binding sale of business agreements with Business Venture
Investments No 1658 Proprietary Limited ("Newco") in terms of which, subject to the fulfilment
of the suspensive conditions referred to in paragraph 2 below ("the Suspensive Conditions"),
AFGRI Operations and Senwes will merge their respective agricultural retail businesses, as well
as the Partrite business of AFGRI ("the Transaction").
THE TRANSACTION
1.1 Rationale
1.1.1 To optimise efficiencies by means of building economies of scale and
diversifying business operations;
1.1.2 To diversify the areas of operation of each of AFGRI Operations and Senwes
and thereby decrease the geographic and crop specific risks that the parties
face;
1.1.3 To create further economies of scale through the ability to negotiate improved
volume discounts with large suppliers for key inputs, as well as allowing for
more efficient central management of important operational elements such as
procurement and logistics;
1.1.4 The Partrite business would benefit from the greater volumes purchased by
Newco; and.
1.1.5 The parties envisage cost saving benefits from shared overhead structures,
including updating and integrating an information technology system.
1.2 Terms of the Transaction
With effect from the effective date of the Transaction, which will occur once the last
of the Suspensive Conditions has been satisfied ("the Effective Date"):
1.2.1 AFGRI Operations will sell:
1.2.1.1 its retail agricultural business, consisting of the retail outlets trading
under the name and style "Town and Country" and "Farm City"; and
1.2.1.2 its shareholding in Partrite Proprietary Limited ("Partrite"), which
conducts a wholesale business that sources, imports and distributes
agricultural and industrial parts across the country,
(collectively "the AFGRI Retail Business") to Newco, as a going concern;
1.2.2 Senwes will sell to Newco its agricultural retail business consisting of the retail
outlets trading under the name and style "Senwes Village", "Village Grocer"
and "Quick Serve" ("the Senwes Retail Business"), as a going concern,
which will include the sale by Senwes's wholly-owned subsidiary, Senwes
Capital ( Proprietary) Limited, of certain immovable properties utilised for the
Senwes Retail Business as a going concern;
.
1.2.3 After the final auditors’ determination of the respective values of the AFGRI
Retail Business and the Senwes Retail Business, the party whose business’s
value is the lower of the two shall contribute a cash adjustment to the other
party to ensure that the respective values of the businesses are equal.
1.2.4 Upon completion of the Transaction, each of AFGRI Operations and Senwes
will hold 50% of the issued shares in Newco.
1.2.5 The board of directors of Newco will comprise of an equal amount of directors
nominated by each of AFGRI Operations and Senwes from time to time.
1.2.6 All the other business units of AFGRI Operations and Senwes, including the
equipment divisions and the international retail businesses, are specifically
excluded from the Transaction.
1.2.7 It is envisaged that the AFGRI Operations and Senwes retail outlets will
initially continue to trade under their respective trading names.
1.3 Purchase consideration
1.3.1 The purchase consideration for the AFGRI Retail Business will be discharged
by Newco by the issue to AFGRI Operations of 50% of authorised shares of
Newco.
1.3.2 The 50% shareholding in Newco is indicatively valued at approximately
R440 million, which is based on fair value assumptions at the time of issuing
this announcement.
1.4 Pro forma financial effects of the Transaction
1.4.1 For purposes of calculating the pro forma financial effects of the Transaction,
the pro forma Balance Sheet impact of the Transaction is based on the
assumption that the Transaction was effective on 31 December 2011, while
the pro forma Income Statement impact is based on the assumption that the
Transaction was effective on 1 July 2011.
1.4.2 These unaudited pro forma financial effects, which are the responsibility of the
directors of AFGRI, have been prepared for illustrative purposes only and
because of their nature may not fairly present AFGRI's financial position,
changes in equity, results of operations or cash flows.
1.4.3 The pro forma financial effects of the Transaction on AFGRI’s earnings per
share, headline earnings per share, net asset value per share and net tangible
asset value per share for the interim financial year ended 31 December 2011,
are not significant (i.e. are less than 3%) and have, therefore, not been
disclosed. These calculations exclude any synergistic benefits resulting from
the Transaction and are based on fair value assumptions for the retail
businesses and underlying assets. The calculations are further based on
IFRS applicable at 31 December 2011.
2. SUSPENSIVE CONDITIONS
The Transaction is subject to the fulfilment or waiver of, inter alia, the following suspensive
conditions:
2.1 the respective boards of directors of AFGRI,AFGRI Operations and Senwes
unconditionally approving the Transaction;
2.2 each of the transaction agreements giving effect to the Transaction ("the
Transaction Agreements"), including but not limited to a shareholders agreement
in respect of Newco, is entered into between AFGRI Operations and Senwes and
such Transaction Agreements becoming unconditional in accordance with their
terms;
2.3 the competition authorities approving the Transaction, provided that such approval
shall either be unconditional or, if such approval is subject to conditions, it shall be
subject to conditions acceptable to AFGRI ,AFGRI Operations and Senwes; and
2.4 AFGRI, AFGRI Operations and Senwes approving the final valuation of the AFGRI
Retail Business and the Senwes Retail Business.
3. CATEGORISATION OF THE TRANSACTION
The Transaction is a Category 2 transaction in terms of paragraph 9.5 (a) of the JSE
Listing Requirements.
Newco is not a subsidiary company of AFGRI for purposes of paragraph 9.16 of the JSE
Listing Requirements.
31 July 2012
Attorneys for the Company and AFGRI Operations
Webber Wentzel
Attorneys for Senwes
Cliffe Dekker Hofmeyr
Sponsor of the Company
Investec Bank Limited
Date: 31/07/2012 10:45:00 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.
Sharenet Sites 
