Wrap Text
Acquisition of the Remaining Minority Interest in Quality Beverages 2000 (Pty) Ltd
BOWLER METCALF LIMITED
Incorporated in the Republic of South Africa
(Registration number 1972/005921/06)
Share code: BCF ISIN: ZAE0000308797
(“Bowler Metcalf” or “the Company”)
ACQUISITION OF THE REMAINING MINORITY INTEREST IN QUALITY
BEVERAGES 2000 PROPRIETARY LIMITED (“Quality Beverages”)
INTRODUCTION
The Company is pleased to advise shareholders that negotiations with regard to the
proposed purchase of the remaining minority interest of 25.1% in Quality Beverages
(“the Acquisition”), with effect from 1 July 2012, have been concluded, the terms of
which are outlined in this announcement.
NATURE OF BUSINESS AND RATIONALE
Quality Beverages is a soft drink manufacturer producing soft drinks under the well-
known Jive, Jive Lite and Vimto brands as well as third party filling for mainly retail
brand holders. Bowler Metcalf acquired an initial interest in the Quality Beverages in
2002 in order to cement a relationship with a promising customer. Over the years,
this stake was increased to 74.9% by way of acquisitions and issues. The
acquisition of the remaining minority interest completes Bowler Metcalf’s longer term
vision of vertical integration with a now major customer.
TERMS OF THE ACQUISITION
On 25 January 2013, the Company concluded a Sale of Shares and Claims
Agreement (“Sale Agreement”) with the trustees for the time being of The Sarang
Family Trust (Master’s reference: IT 699/95) (“the Seller”), and Mr Mohamed Sharief
Parker (“MS Parker”), for the purchase of the remaining 25.1% of the ordinary shares
in the issued ordinary share capital of Quality Beverages. In addition, the Company
has entered into an Earn-Out Agreement whereby the Seller can be further rewarded
based on the actual financial performance of Quality Beverages for the 2014
financial year and restraint of trade agreements.
The maximum purchase consideration is R38 500 000 (thirty-eight million five
hundred thousand Rand, comprising a base amount of R34 500 000 (thirty-four
million five hundred thousand Rand) (“Purchase Price”) for the sale shares and sales
claims and a maximum earn-out payment of R4 000 000 (four million Rand).
The Sale Agreement
The Purchase Price of R34 500 000 (thirty-four million five hundred thousand Rand)
is payable to the Seller as follows:
- R30 500 000 (thirty million five hundred thousand Rand) on the Closing Date
- R3 000 000 (three million Rand) on 31 October 2013; and
- R1 000 000 (one million Rand) on the expiry of the restraint of trade payments,
which is expected to be on or about October 2015
The Closing Date of the Acquisition is 5 working days following the fulfilment or
waiver of all the Conditions Precedent as detailed below and The Purchase Price
shall bear interest at a rate of 6% (n.a.c.a.) from the Closing Date to the date of
payment thereof in full.
The Earn-Out Agreement
The Earn-Out Agreement will further reward the Seller should Quality Beverages and
its subsidiaries exceed agreed upon minimum financial parameters for the 12
months ending 30 June 2014. The final earn-out amount will be based on the
audited results for the year then ended and, in terms of a stepped formula, cannot
exceed R4 000 000 (four million Rand). It is envisaged that the payment of the final
earn-out amount will be made in November 2014.
CONDITIONS PRECEDENT
The acquisition is subject to the following remaining conditions precedent:
- Shareholder approval as contemplated in the JSE listing requirements on or
before 31 March 2013.
The Company and the Seller may extend the period for the fulfilment or waiver of
any one or more or part of any of the Conditions Precedent.
CATEGORISATION
This proposed Acquisition is a Category 2 acquisition for the Company, but as the
Seller is a related party per paragraph 10.1(b)(i) of the JSE Listings Requirements, a
circular to shareholders, incorporating a fairness opinion from an Independent
Expert, will be prepared for distribution to shareholders.
UNAUDITED PRO FORMA FINANCIAL EFFECTS
The unaudited pro forma financial effects of the Acquisition are the responsibility of
the Bowler Metcalf directors and have been prepared for illustrative purposes only to
provide information about how the Acquisition may affect the financial position and
results of Bowler Metcalf and, because of its nature, may not give a fair reflection of
Bowler Metcalf’s financial performance and position, changes in equity, and results
of operations and cash flows after the Acquisition, and are based on the
assumptions that:
- For the purpose of calculating earnings per share and headline earnings per
share, the Acquisition was implemented from 01 July 2011; and
- For the purpose of calculating net asset value per share and net tangible asset
value per share, the Acquisition was implemented on 30 June 2012.
The pro forma financial effects have been prepared using accounting policies that
comply with IFRS and that are consistent with those applied in the audited results of
Bowler Metcalf for the twelve months ended 30 June 2012.
Before the After the
Acquisition Acquisition Change
(“A”) (“B”) (%)
Earnings and diluted earnings
per share (cents) 71.72 66.83 -6.82
Headline and diluted headline
earnings per share (cents) 70.32 65.43 -6.95
Net asset value per share (cents) 534.9 483.0 -9.70
Tangible net asset value per
share (cents) 515.3 463.4 -10.07
Weighted average number of
shares in issue 81 171 607 81 171 607 0.0
Number of shares in issue 81 162 176 81 162 176 0.0
Notes and assumptions:
1. The amounts set out in the “Before the Acquisition” Column A above have been
extracted from the published audited consolidated financial results of Bowler
Metcalf for the year ended 30 June 2012.
2. Earnings and headline earnings per share in the “After the Acquisition” Column
B take into account the following:
- the 25.1% of net profit after tax attributable to non-controlling interests
was allocated to the comprehensive income of the Company;
- the loss of interest was accounted for on the initial cash payment of the
Purchase Price;
- interest payable on the delayed cash payment of the Purchase Price was
accounted for;
- restraint of trade payments totalling R4 000 000 (four million Rand) which
are to be paid over a 24 month period commencing October 2013;
- once-off costs of costs associated with the Acquisition and related circular
of R750 000 (seven hundred and fifty thousand Rand) and
- notional taxation assumed at 28% where appropriate.
3. Net asset value per share and tangible net asset value per share in the “After
Acquisition” Column B take into account the following:
- the reversal of the minority interest held in Quality Beverages as at 30
June 2012;
- the excess amount paid above the net asset value of the 25.1% minority
interest acquired has reduced the retained income as the Company
already had effective control over Quality Beverages;
- provision has been made for the payment of the Purchase Price via an
initial cash payment of R30 500 000 (thirty million five hundred thousand
Rand), the raising of a liability of R4 000 000 (four million Rand) for the
balance due and R4 000 000 (four million Rand) for the maximum
potential earn-out payment; and
- provision has been made for the raising of a liability for the restraint of
trade payments and once-off costs as detailed above.
DOCUMENTATION AND SALIENT DATES
Further details of the Acquisition will be included in a circular to be sent to
shareholders in due course, which circular will include, inter alia, a fairness opinion
on the Acquisition from an Independent Expert, a notice of the General Meeting and
a form of proxy for use by certificated shareholders.
The salient dates in relation to the General Meeting will be published on or about the
date of posting of the Circular.
Johannesburg
25 January 2013
Sponsor:
Arcay Moela Sponsors Proprietary Limited
Legal Advisors to The Sarang Family Trust Legal Advisors to Bowler Metcalf
Edward Nathan Sonnenbergs Inc . Webber Wentzel Attorneys
Date: 25/01/2013 05:34:00 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 
