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ITALTILE LIMITED - Firm intention to make a conditional offer to Ceramic shareholders and withdrawal of cautionary announcements

Release Date: 31/08/2012 15:52
Code(s): ITE CRM     PDF:  
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Firm intention to make a conditional offer to Ceramic shareholders and withdrawal of cautionary announcements

Italtile Limited                                     Ceramic Industries Limited
(Incorporated in the Republic of South Africa)       (Incorporated in the Republic of South Africa)
(Registration number 1955/000558/06)                 (Registration number 1982/008520/06)
ISIN: ZAE000099123                                   ISIN: ZAE000008538
JSE Share code: ITE                                  JSE Share code: CRM
("Italtile”)                                         ("Ceramic”)



     Firm intention to make a conditional offer to Ceramic shareholders and withdrawal of
                                      cautionary announcements




1        Introduction

         Further to the cautionary announcements published on the Securities Exchange News
         Service of the JSE Limited (“JSE”) on Monday, 28 May 2012, Friday, 29 June 2012 and
         Tuesday, 31 July 2012, Ceramic shareholders are advised of the terms of a joint offer to be
         made by Italtile and Rallen Proprietary Limited (“Rallen”) to shareholders of Ceramic (other
         than Rallen, its subsidiaries, Mr GAM Ravazzotti and subsidiaries of Ceramic) ("the
         Independent Ceramic Shareholders").

2        Status of the Offer

         Ceramic shareholders are advised that Italtile and Rallen (collectively “the Offerors”) have
         delivered to the Ceramic Board of directors ("the Ceramic Board") a notice of their firm
         intention to make an offer ("the Offer") to acquire, subject to the conditions precedent
         detailed in paragraphs 4.1 and 5.3 below, all of the ordinary shares held by the Ceramic
         Independent Shareholders in the issued share capital of Ceramic ("the Target Shares") at a
         price of R130.00 per Target Share (“the Offer Consideration”).

         The Ceramic Board has resolved that the Company will apply to the JSE Limited ("the JSE")
         for a termination of the listing of its ordinary shares on the main board of the JSE
         (“Delisting”).

3        Rationale for the Offer

         Italtile has a long history of purchasing tiles, sanitaryware and baths from Ceramic and as a
         result of this good relationship, Ceramic has grown to be Italtile's most important supplier. In
         order to support Italtile's growth strategy it would like to strengthen its relationship with
         Ceramic by acquiring a strategic shareholding in Ceramic.

         Italtile wishes to acquire a maximum of 20% of all the Ceramic Shares. Rallen has agreed to
         make the Offer with Italtile in order to ensure that a full offer can be made to the Independent
         Ceramic Shareholders in order to facilitate the Delisting in accordance with the JSE Listings
         Requirements. Rallen also has full confidence in the future of Ceramic and is therefore
         desirous to increase its interest in Ceramic.

4        Circular and timing of the Offer

         In terms of the Companies Act, 71 of 2008 ("the Act") and its regulations ("the Regulations"),
         the Offerors are required to prepare an offer circular to the Independent Ceramic
         Shareholders and Ceramic is required to prepare a circular in response to such offer circular.
         The Offerors and Ceramic have agreed to combine the offer circular and the response
         circular into a joint circular to Ceramic shareholders (“Joint Circular”). It is envisaged that the
         Joint Circular will be posted during the latter part of September 2012.

         The Offerors and Ceramic will publish a further joint announcement in due course, which will
         contain the salient dates pertaining to the Offer.

4.1      Conditions to the posting of the Joint Circular

         The posting of the Joint Circular is subject to the fulfilment or waiver (in whole or in part, and
         to the extent any condition is capable of being waived) in writing by the Offerors at their sole
         discretion of the following conditions precedent:

         • Nodus Capital Proprietary Limited (“Nodus”), as independent advisor to independent
           members of the Ceramic Board, advising the Ceramic Board that the Offer is fair and
           reasonable to the Independent Ceramic Shareholders;
         • after considering Nodus’ opinion, the Ceramic Board recommending to the Independent
           Ceramic Shareholders to accept the Offer;
         • the requisite approvals being received from the JSE, the Takeover Regulation Panel
           ("TRP") and the Financial Surveillance Department of the South African Reserve Bank
           for the posting of the Joint Circular; and
         • the Offerors being satisfied with the substance of the resolutions that Ceramic intends to
           propose to the Ceramic shareholders for purposes of fulfilling the relevant condition
           precedent set out in paragraph 5.3 below.

5        Terms of the Offer

5.1      Basis of acquisition of Target Shares
         The Target Shares acquired in terms of the Offer will be acquired by the Offerors on the
         following basis:

         • a maximum of 20% of the total issued ordinary share capital of Ceramic in respect of
           which the Offer has been accepted shall be acquired by Italtile; and
         • to the extent that valid acceptances of the Offer are received in respect of more than
           20% of the issued ordinary share capital of Ceramic, Rallen will acquire such excess.

         The Offer Consideration of R130.00, in cash, per Target Share represents an 18% premium
         to the volume weighted average price of Ceramic Shares of R110.03 over the 30 traded days
         preceding the date of the publication of the Italtile and Ceramic cautionary announcements
         on SENS on Monday, 28 May 2012. The Target Shares will be acquired cum any dividend
         declared by Ceramic.

5.2      Funding of the Offer Consideration and cash confirmation

         Italtile and Rallen will each fund their portion of the aggregate Offer Consideration out of their
         own cash resources and have provided written confirmations from Investec Bank Limited and
         Sanlam, respectively, to the TRP that they have the cash resources necessary to meet their
         obligations under the Offer.

         Ceramic has received confirmations from its Black Economic Empowerment (“BEE”)
         shareholders that they are unable to accept the Offer in respect of 2 029 285 of their Target
         Shares as a result of contractual arrangements between Ceramic and each of the BEE
         shareholders. One of the BEE shareholders, namely, Ceramic Foundation Trust, has
         provided an irrevocable undertaking that it will not accept the Offer in respect of an additional
         49 688 Target Shares. In addition, the trustees of the Ceramic Industries Share Incentive
         Trust (“Trust”) have provided an irrevocable undertaking not to accept the Offer in respect of
         the 1 067 245 Target Shares the Trust holds on behalf of participants and as treasury shares.

5.3      Conditions to the implementation of the Offer

         The Offer will be subject to the fulfilment or waiver (to the extent any condition is capable of
         being waived) in writing by the Offerors of the following conditions precedent by no later than
         31 October 2012:

         • the Offer having been validly accepted by Independent Ceramic Shareholders holding
           no less than 3 043 924 Ceramic Shares (representing 15% of the issued ordinary share
           capital of Ceramic);
         • the approval by the requisite majority of Ceramic Shareholders in general meeting of
           resolutions approving the Delisting and authorising the amendment of the three Ceramic
           employee incentive schemes and the amendments that are required, as a result of the
           Delisting, to Ceramic’s agreements with its BEE shareholders;
         • approval by the JSE of the Delisting; and
         • the issue by the TRP of a compliance certificate in relation to the Offer in accordance
           with section 121(a) of the Act.

6        Opinions and recommendations

         As required in terms of the Act and the Regulations the Ceramic Board has identified those
         members of the Ceramic Board who are independent (“Independent Board”) for purposes of
         evaluating the Offer. The Independent Board has appointed Nodus in terms of Regulation 90
         of the Regulations and section 1 of the JSE Listings Requirements, to provide a fair and
         reasonable opinion in regard to the Offer (“Opinion”) and to make appropriate
         recommendations to the Independent Board for the benefit of Ceramic shareholders. The text
         of the Opinion and the views of the Independent Board will be detailed in the Joint Circular.
  
7        Interests in Ceramic Shares

         At the date of this announcement, Italtile had no interest in any of the listed securities of
         Ceramic.

         At the date of this announcement, Mr GAM Ravazzotti, Rallen and Rallen’s wholly-owned
         subsidiary, Rolrose Investments Proprietary Limited’s, interest in Ceramic amounted, in
         aggregate, to 11 367 293 Ceramic shares, equivalent to 56.02% of Ceramic’s current issued
         ordinary share capital. In addition, Ceramic’s subsidiaries hold 115 298 Ceramic shares,
         equivalent to 0.57% of Ceramic’s current issued ordinary share capital, which Ceramic
         shares are classified as treasury shares for financial reporting purposes.

8        Independent Board’s and Italtile Board responsibility statement

         The Independent Board and the Italtile Board individually accept responsibility for the
         information contained in this firm intention announcement and confirm that to the best of their
         respective knowledge and belief that the information is true and does not omit anything likely
         to affect the importance of the information.

9        Withdrawal of cautionary

         Ceramic and Italtile shareholders are advised that the cautionary announcements relating to
         both companies have been withdrawn.

         Johannesburg

         31 August 2012

         Sponsor to Italtile                                Sponsor to Ceramic
         KPMG Services (Pty) Ltd                            One Capital


         Legal advisor to Italtile                          Legal advisor to Ceramic
         Webber Wentzel                                     Edward Nathan Sonnenbergs


         Independent expert
         Nodus Capital (Pty) Ltd

Date: 31/08/2012 03:52:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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