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Firm Intention By Steinbuild To Acquire The Entire Issued Share Capital Of Hardware Warehouse And Withdrawal Of Caut
HARDWARE WAREHOUSE LIMITED STEINHOFF DOORS AND BUILDING
Incorporated in the Republic of South Africa MATERIALS PROPRIETARY LIMITED
(Registration number 2007/004302/06) Incorporated in the Republic of South Africa
Share code: HWW ISIN: ZAE000104253 (Registration number 1972/004708/07)
(“Hardware Warehouse”) (“Steinbuild”)
JOINT ANNOUNCEMENT OF A FIRM INTENTION BY STEINBUILD TO ACQUIRE THE ENTIRE
ISSUED SHARE CAPITAL OF HARDWARE WAREHOUSE (“FIRM INTENTION ANNOUNCEMENT”)
AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
The respective boards of directors of Hardware Warehouse and Steinbuild, a wholly-owned subsidiary of
JD Group Limited (“JD Group”) are pleased to announce that Steinbuild has made an offer (“Offer”) to
acquire the entire issued share capital of Hardware Warehouse (“Proposed Transaction”), being
77 900 000 Hardware Warehouse shares (“Hardware Warehouse Shares”) by way of a scheme of
arrangement (“Scheme”) in terms of section 114 of the Companies Act, Act 71 of 2008, as amended,
(“the Companies Act”), to be proposed by the board of directors of Hardware Warehouse (“Hardware
Warehouse Board”) between Hardware Warehouse and the holders of Hardware Warehouse Shares
(“Hardware Warehouse Shareholders”).
In terms of the Offer, Hardware Warehouse Shareholders will, if the Scheme becomes operative, receive
R1.14 (one Rand and fourteen cents) in cash for each Hardware Warehouse Share held on the Scheme
consideration record date (“Scheme Consideration”).The Scheme Consideration will escalate at a rate of
8.5% per annum compounded monthly in arrears calculated on the amount of R1.14 per Hardware
Warehouse Share from 28 February 2013 to the date of payment, if such date of payment occurs after
28 February 2013.
The Scheme Consideration represents a premium of:
- 92.3% to the VWAP of Hardware Warehouse Shares traded on the JSE over the 30 (thirty) days up
to and including the date on which the first cautionary announcement was released on SENS, being
Friday, 15 June 2012 (“the Publication Date”); and
- 27.0% to the VWAP of Hardware Warehouse Shares traded on the JSE over the 30 (thirty) days up
to and including 30 November 2012, being the last business day immediately prior to the date of this
Firm Intention Announcement.
2. RATIONALE FOR THE SCHEME
The Proposed Transaction will result in a number of financial and operational benefits to the stakeholders
of both businesses, including:
- Hardware Warehouse Shareholders receiving a price that reflects the inherent value of the Hardware
Warehouse business;
- the Hardware Warehouse business benefiting from being part of a larger retail group with a national
footprint, including property management, procurement, treasury management and financial
services; and
- a reduced risk profile due to a greater footprint across southern Africa.
3. CONDITIONS PRECEDENT TO THE SCHEME
The Scheme will be subject to the fulfilment, or waiver (in whole or in part), of the following conditions
precedent on or before 30 April 2013, or such later date as Hardware Warehouse may specify in writing:
3.1. prior to and with effect from 31 December 2012, On-Tap Border Proprietary Limited (“On-Tap”), an
associate in which Hardware Warehouse holds a 49% interest, being disposed of by Hardware
Warehouse, including all of its assets and liabilities, to Ivan Senar (or his nominee) without any
retention by Hardware Warehouse of any liabilities of whatsoever nature relating to On-Tap,
provided that such disposal shall be effected upon such terms as will not negatively affect the net
asset value of Hardware Warehouse as at the date of the disposal of On-Tap;
3.2. the entering into of Service Agreements, Confidentiality Agreements and Restraints of Trade
Agreements by certain members of Key Management and the executive directors of Hardware
Warehouse within 14 days of signature of the Implementation Agreement between Hardware
Warehouse and Steinbuild;
3.3. the requisite approvals being received from the JSE Limited (“the JSE”) and the Takeover
Regulation Panel (“the Panel”) for the posting of the Scheme Circular referred to in paragraph 9
below (“Scheme Circular”);
3.4. the approval of the Scheme by the requisite majority of Hardware Warehouse Shareholders, as
contemplated in section 115(2) of the Companies Act, and:
3.4.1. to the extent required, the approval of the implementation of the Scheme by the court; and
3.4.2. if applicable, Hardware Warehouse not treating the aforesaid resolution as a nullity, as
contemplated in section 115(5)(b) of the Companies Act;
3.5. Hardware Warehouse Shareholders not having exercised appraisal rights by giving valid demands
to this effect to Hardware Warehouse within 30 (thirty) business days following the Hardware
Warehouse Shareholders meeting convened to approve the Scheme (“Scheme Meeting”), in terms
of section 164(7) of the Companies Act;
3.6. the unconditional written approval of the Proposed Transaction (or if such approval is conditional,
such conditions being satisfactory to Hardware Warehouse and Steinbuild) having been obtained
from:
3.6.1. the Panel (in terms of a compliance certificate to be issued in terms of the Companies Act);
3.6.2. the Competition Commission, Competition Tribunal and/or Competition Appeal Court, as
the case may be, in terms of the Competition Act 89 of 1998, as amended;
3.6.3. those third parties from which the failure to obtain consent, approval or waiver would result
in a breach by Hardware Warehouse of the agreement with such third party;
3.7. to the extent necessary, receipt of waivers from any lenders to Hardware Warehouse of any
changes in control covenants they may have or any events of default which may be triggered by
the Scheme, on or before the date of the Scheme Meeting; and
3.8. by no later than 31 January 2013, Steinbuild procuring an undertaking in writing from Hardware
Warehouse’s commercial bankers to release, with effect from the date on which the Scheme
becomes operative, Ivan Senar, Shaun Miller, the IMJS Family Trust and the Shaun Miller Family
Trust from all liability in terms of the suretyships provided to such commercial bankers.
The conditions set out in paragraphs 3.3, 3.4, 3.5 and 3.6 are of a regulatory nature and cannot be
waived. The conditions set out in paragraphs 3.1, 3.2 and 3.7 above are for the benefit of Steinbuild and
may be waived (in whole or in part) by Steinbuild by notice in writing to Hardware Warehouse prior to the
date on which such conditions are to be fulfilled. The condition set out in paragraph 3.8 above is for the
benefit of Ivan Senar and Shaun Miller and accordingly may be waived (in whole or part) by Hardware
Warehouse, on behalf of Ivan Senar and Shaun Miller, by notice in writing prior to the date upon which
such condition is to be fulfilled.
4. SHAREHOLDER UNDERTAKINGS
To date, irrevocable undertakings to vote in favour of the Scheme have been received from certain
Hardware Warehouse Shareholders holding in aggregate 56 524 930 (fifty six million five hundred and
twenty four thousand nine hundred and thirty) Hardware Warehouse Shares, representing 72.6%
(seventy two point six percent) of the Hardware Warehouse Shares.
5. GUARANTEES AND CONFIRMATIONS TO THE TAKEOVER REGULATION PANEL
Standard Bank Limited has delivered an irrevocable, unconditional bank guarantee for an amount of
approximately R89 million (eighty nine million Rand) to the Panel in compliance with regulations 111(4)
and 111(5) of the Takeover Regulations, which amount is sufficient for the purpose of fully satisfying the
Scheme Consideration.
6. TERMINATION OF THE HARDWARE WAREHOUSE LISTING
Following implementation of the Scheme, application will be made to the JSE to terminate the listing of
the Hardware Warehouse Shares on the JSE.
7. ACTING AS PRINCIPAL
Steinbuild confirms that it is the ultimate proposed purchaser of all Hardware Warehouse Shares and that
it is acting alone and not in concert with, or as agent or broker for, any other party. Steinbuild and its
directors currently do not hold or control any shares or options to acquire any shares in Hardware
Warehouse.
8. RECOMMENDATION AND FAIRNESS OPINION
The Hardware Warehouse Independent Board has appointed the Independent Expert, an independent
adviser acceptable to the Panel, to provide it with external advice in relation to the Scheme and to make
appropriate recommendations to the Independent Board in the form of a fair and reasonable opinion.
The Hardware Warehouse Independent Board intends, based on the information currently available to it,
to make a recommendation to Hardware Warehouse Shareholders to vote in favour of the resolutions to
be proposed at the Scheme Meeting, provided that the Hardware Warehouse Independent Board
receives an opinion from the Independent Expert to the effect that the Scheme Consideration is fair and
reasonable to Hardware Warehouse Shareholders.
The substance of the external advice received from the Independent Expert and the views of the
Hardware Warehouse Independent Board will be detailed in the Scheme Circular.
9. DOCUMENTATION
Details of the Scheme will be included in the Scheme Circular, which will contain, inter alia, the Scheme,
a notice of the meeting of Hardware Warehouse Shareholders, a form of proxy, and a form of surrender
and transfer. The Scheme Circular is expected to be posted to Hardware Warehouse Shareholders on or
about 18 December 2012.
The salient dates pertaining to the Scheme will be released on SENS and published in the press prior to
the posting of the aforementioned Scheme Circular.
10. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Following the release of this Firm Intention Announcement, the cautionary announcements originally
published by Hardware Warehouse on 15 June 2012, the latest of which was released on SENS on
7 November 2012, are hereby withdrawn and caution is no longer required to be exercised by Hardware
Warehouse Shareholders when dealing in Hardware Warehouse Shares.
11. HARDWARE WAREHOUSE RESPONSIBILITY STATEMENT
The Independent Board of Hardware Warehouse accepts responsibility for the information contained in
this Firm Intention Announcement to the extent that it relates to Hardware Warehouse. To the best of their
knowledge and belief, the information contained in this Firm Intention Announcement is true and nothing
has been omitted which is likely to affect the import of the information.
12. STEINBUILD RESPONSIBILITY STATEMENT
Steinbuild’s Board of Directors accepts responsibility for the information contained in this Firm Intention
Announcement to the extent that it relates to Steinbuild. To the best of their knowledge and belief, the
information contained in this Firm Intention Announcement is true and nothing has been omitted which is
likely to affect the import of the information.
Johannesburg
3 December 2012
Corporate and Designated Advisor to Hardware Warehouse
Merchantec Capital
Legal Adviser to Hardware Warehouse
Fluxmans Inc.
Independent Expert
Grant Thornton Advisory Services Proprietary Limited
Legal Adviser to Steinbuild
Girard Hayward Incorporated
Competition Adviser to Steinbuild
Norton Rose
Date: 04/12/2012 12:07:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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