ITALTILE LIMITED - Proposed acquisition by Italtile of a strategic stake in Ceramic Industries Limited (Ceramic)

Proposed acquisition by Italtile of a strategic stake in Ceramic Industries Limited (“Ceramic”)

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



 Proposed acquisition by Italtile of a strategic stake in Ceramic Industries Limited (“Ceramic”)




   1. Introduction

   Italtile shareholders (“Shareholders”) are referred to the joint announcement by Italtile and Ceramic
   published on the Securities Exchange News Service of the JSE Limited (“JSE”) on Friday, 31 August
   2012 and in the South African press on Monday, 3 September 2012 (“Joint Announcement”) in which
   Ceramic shareholders were advised of the terms of a joint offer (“Offer”) to be made by Italtile and
   Rallen Proprietary Limited ("Rallen") to shareholders of Ceramic (other than Rallen, its subsidiaries,
   GAM Ravazzotti and subsidiaries of Ceramic) ("the Independent Ceramic Shareholders").
   Shareholders are referred to the Joint Announcement for the full terms and conditions of the Offer.


   In terms of the Offer, Italtile will acquire a maximum of 20% of the total issued ordinary share capital
   of Ceramic in respect of which the Offer has been accepted (“the Acquisition”) 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.

   2. Nature of business of Ceramic

   The business of Ceramic and its subsidiary companies (“Ceramic Group”) comprises of the
   manufacture, sale, marketing and/or distribution of ceramic floor and wall tiles and sanitaryware,
   including acrylic bathroom ware. The Ceramic Group has four tile factories in Vereeniging and
   Babelegi, a sanitary ware factory and an acrylic bath factory in Krugersdorp, as well as a tile factory
   in New South Wales, Australia.

   3. Rationale

   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 issued ordinary shares of Ceramic (“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. Rallen also has full confidence in the future of
   Ceramic and is therefore desirous to increase its interest in Ceramic.
 
   4. Purchase consideration

   The purchase consideration in terms of the Offer is R130.00, in cash, for each Ceramic Share
   acquired. In the event that Italtile acquires 20% of the issued share capital of Ceramic, the maximum
   purchase consideration payable by Italtile will be R527 613 580.

   5. Conditions precedent to the Acquisition

   Shareholders are referred to the Joint Announcement which sets out the conditions precedent to the
   posting of the circular relating to the Offer (“Joint Circular”) and the implementation of the Offer.

   6. Financial effects

   Italtile’s maximum investment in Ceramic for a 20% stake will amount to R527 613 580. The value of
   the net assets being acquired, as extracted from the published interim results of Ceramic for the six
   months ended 31 January 2012, is R249 612 200.

   If the Acquisition had taken place on 1 July 2011, the profit that Italtile would have equity accounted
   in respect of the Acquisition, for the 12 months from 1 February 2011 to 31 January 2012, amounts
   to R21.8 million.

   The pro forma effects of the Acquisition on Italtile’s statement of comprehensive income and
   statement of financial position for the year ended 30 June 2012 are less than 3% and, therefore, are
   not significant and have not been included in this announcement.

   7. JSE requirements with regards to the Acquisition

   The Acquisition is classified as a Category 2 transaction in terms of the JSE Listings Requirements
   and, accordingly, no further documentation or approval by Shareholders is required by the JSE for
   implementation of the Acquisition by Italtile.




   Bryanston
   31 August 2012

   Sponsor                                               Legal advisor
   KPMG Sponsors (Pty) Ltd                               Webber Wentzel

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