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Joint announcement relating to the firm intention by Bidvest
The Bidvest Group Limited Mvelaserve Limited
(Incorporated in the Republic of South Africa) (Incorporated in the Republic of South Africa)
(Registration number 2000/006082/06) (Registration number 1999/003610/06)
Share Code: BVT ISIN: ZAE000117321 JSE Share Code: MVS ISIN: ZAE000151353
(Bidvest) (Mvelaserve)
JOINT ANNOUNCEMENT RELATING TO THE FIRM INTENTION BY BIDVEST TO MAKE A
CASH OFFER TO ACQUIRE THE ENTIRE ISSUED ORDINARY SHARE CAPITAL OF
MVELASERVE THAT IT DOES NOT ALREADY OWN OR HAS NOT ENTERED INTO AN
AGREEMENT TO ACQUIRE
1. INTRODUCTION
Mvelaserve shareholders are advised that on May 8 2013 the board of directors of
Mvelaserve received a firm intention letter from Bidvest (Firm Intention Letter) proposing
the acquisition by Bidvest of the entire issued ordinary share capital, of Mvelaserve, excluding
treasury shares, that it does not already own or has entered into an agreement to acquire
(the/this Proposed Transaction). Bidvest currently owns 49,188,683 shares in Mvelaserve
which constitutes approximately 34.75% of the issued ordinary share capital of Mvelaserve.
Bidvest has entered into a conditional agreement with Mvelaphanda Holdings (Pty) Ltd
(Mvela Holdings) to acquire 25,009,438 ordinary shares of no par value each, constituting
approximately 17.67%, of the issued ordinary share capital of Mvelaserve at a price of R8.50
per share (Acquisition Agreement). Should Bidvest acquire any Mvelaserve ordinary
shares as a result of the Proposed Transaction, not already held by Bidvest or outside the
Acquisition Agreement (Remaining Shares), at a higher price than R8.50 Mvela Holdings
will receive the higher price paid per share for the Remaining Shares in respect of the shares
sold in terms of the Acquisition Agreement. The only condition remaining to be fulfilled in
terms of the Acquisition Agreement is the receipt of the unconditional approval (or, if such
approval is conditional, subject to conditions reasonably acceptable to Bidvest) from the
competition authorities for the acquisition of the shares in terms of the Acquisition Agreement
and consequently the acquisition of control of Mvelaserve by Bidvest.
2. TRANSACTION MECHANISM
2.1. The Proposed Transaction may be implemented in accordance with either of the
following two procedures (Scenario A and Scenario B):
Scenario A:
2.1.1. A combined scheme of arrangement and substitute offer (Combined
Scheme and Offer Proposal).
Pursuant to this mechanism, a Scheme of Arrangement (Scheme) in terms
of section 114 of the Companies Act will be proposed by Bidvest between
Mvelaserve and the holders of the Remaining Shares (Remaining
Shareholders), pursuant to which Bidvest will acquire all the Remaining
Shares on the following basis:
2.1.1.1. the Scheme will be proposed in terms of section 114 of the
Companies Act as read together with Section 115 of the
Companies Act;
2.1.1.2. the Scheme will be subject to the fulfilment of the conditions
precedent referred to in paragraph 5 below;
2.1.1.3. the price payable, and the terms of payment to the Remaining
Shareholders for their shares in Mvelaserve will be as is set out in
paragraph 3.1 below;
2.1.1.4. It will be an express term of the Scheme that, if the conditions
precedent set out in paragraph 5.1 and 5.2 below are fulfilled, but
the condition precedent in 5.3.1 (relating to the resolution of
Mvelaserve pursuant to which the Scheme is proposed) is not
approved by the required majority of Mvelaserve shareholders,
then, as soon as is reasonably possible thereafter, Bidvest will
make an offer (Substitute Offer) to the Remaining Shareholders
to acquire the Remaining Shares on the following basis:
2.1.1.4.1. the Substitute Offer will be made under section
117(1)(c)(v) of the Companies Act;
2.1.1.4.2. the Substitute Offer and discharge of the offer
consideration set out in paragraph 3.2 below will be
subject to the fulfilment of the conditions precedent
referred to in paragraph 5.1 and 5.2 below;
2.1.1.4.3. the price payable, and the terms of payment, to the
Remaining Shareholders for their Remaining Shares
will be as is set out in paragraph 3.2 below;
2.1.1.4.4. in the event that the Substitute Offer is accepted by
Mvelaserve shareholders beneficially holding (directly
or indirectly) not less than 90% of all the Remaining
Shares, Bidvest intends to implement a compulsory
acquisition of the outstanding shares in accordance
with section 124 of the Companies Act, following which
Mvelaserve will constitute a wholly-owned subsidiary of
Bidvest and be delisted from the JSE;
2.1.1.4.5. the closing date of the Substitute Offer will be
approximately 10 business days after the fulfilment or,
where applicable, waiver of the last of the conditions
precedent set out set out in paragraph 5 (Closing
Date); and
It is not a requirement of the Combined Scheme and Offer Proposal that the independent
board of Mvelaserve (Independent Board) favourably recommend the Combined Scheme
and Offer Proposal.
OR
Scenario B:
2.1.2. In the event that the Combined Scheme and Offer Proposal is not supported
by the Independent Board, a general offer (Takeover Offer) will be made
directly to Mvelaserve shareholders on the following basis:
2.1.2.1. the terms applicable to the Takeover Offer, as set out in paragraph
2.1.1.4 above, will apply, mutatis mutandis, to the Takeover Offer;
2.1.2.2. the Takeover Offer will be subject to the conditions precedent set out
in paragraph 5.1 and 5.2 below; and
2.1.2.3. in the event that the Takeover Offer is accepted by Mvelaserve
shareholders beneficially holding (directly or indirectly) not less
than 90% of all the Remaining Shares, Bidvest intends to
implement a compulsory acquisition of the outstanding shares in
accordance with section 124 of the Companies Act, following which
Mvelaserve will constitute a wholly-owned subsidiary of Bidvest
and be delisted from the JSE.
2.2. The Combined Scheme and Offer Proposal (Scenario A) will be implemented by
Bidvest if Bidvest receives from Mvelaserve, within three weeks from the date of the
Firm Intention Letter (which period may be extended at the election of Bidvest), an
undertaking by the Independent Board to co-operate with Bidvest in the
implementation of the Combined Scheme and Offer Proposal and, in particular, to
propose the Scheme. Such undertaking must consist of a written confirmation by
Mvelaserve to Bidvest, by counter-signature and return of a duplicate original of the
Firm Intention Letter, that it will co-operate with Bidvest and will propose the Scheme
to Mvelaserve shareholders in accordance with the terms and conditions of the Firm
Intention Letter.
2.3. If Bidvest does not receive the undertakings required from Mvelaserve in terms of
paragraph 2.2 above, or Mvelaserve does not fulfil its obligations in terms of the
undertaking, then Bidvest will act on its firm intention to make an offer as soon as is
reasonably possible thereafter, by implementing the Takeover Offer (Scenario B).
2.4. Should the Scheme or the Takeover Offer be used to implement the Proposed
Transaction, and in the event of the Takeover Offer being implemented and the
provisions of section 124 of the Companies Act being applied, Bidvest will acquire all
of the Remaining Shares from the Remaining Shareholders and, following the
implementation of the Proposed Transaction, Mvelaserve will constitute a wholly-
owned subsidiary of Bidvest and be delisted from the JSE.
3. PURCHASE CONSIDERATION
3.1. In Scenario A, and subject to the fulfilment or waiver (as the case may be) of the
conditions precedent set out in paragraph 5 hereunder, the Scheme will, if it is
implemented, result in the payment by Bidvest to the Remaining Shareholders of a
cash price of R9.10 per Remaining Share (Scheme Price). Should the Scheme be
approved, the maximum aggregate value of the consideration payable by Bidvest to
Mvelaserve shareholders in terms of the Scheme is R608,780,799.90 on the basis of a
total of 141,097,110 Mvelaserve shares in issue, which excludes any Mvelaserve
shares held as treasury shares.
3.2. In terms of Scenario B, the Substitute Offer or the Takeover Offer -
3.2.1. Bidvest proposes to acquire the Remaining Shares for a cash consideration
of R8.50 per Remaining Share acquired (Offer Price).
3.2.2. In the event that the Substitute Offer or the Takeover Offer is accepted by
Mvelaserve shareholders beneficially holding (directly or indirectly) not less
than 90% of all the Remaining Shares and the provisions of section 124 of
the Companies Act is applied, Bidvest will increase the cash consideration to
R9.10 per Remaining Share. The maximum aggregate value of the
consideration payable by Bidvest to Mvelaserve shareholders in terms of the
Offer is R608,780,799.90 on the assumption that all Remaining Shareholders
accept the Offer and on the basis of a total of 141,097,110 Mvelaserve
shares in issue, which excludes any Mvelaserve shares held as treasury
shares.
3.3. The Scheme Price and the Offer Price is based on the assumption that Mvelaserve
does not make any distribution to its shareholders or amend its capital structure from
the date of the Firm Intention Letter until the settlement date in terms of the Substitute
Offer or the Takeover Offer, or the date of implementation of the Scheme in respect of
the Scheme (Offer Period). In the event that Mvelaserve makes a distribution or
amends its capital structure, the Scheme Price and the Offer Price will be reduced on
a per share basis accordingly.
3.4. The Scheme Price and Offer Price represent premiums of 11.8% and 4.5%
respectively to the 30 day volume-weighted average price of R8.14 (which includes the
11,800,000 shares acquired by Bidvest at R8.12) and premiums of 11.0% and 3.7%
respectively based on the closing price on 7 May 2013 of R8.20.
4. RATIONALE FOR THE OFFER
Bidvest believes that the Proposed Transaction will enable Mvelaserve to service its
customers more efficiently after forming part of Bidvest. Once integrated, the offering to both
Bidvests and Mvelaserves customers will be enhanced.
5. CONDITIONS PRECEDENT
Implementation of the Proposed Transaction (whether in the form of the Scheme, the
Substitute Offer or the Takeover Offer) is subject to the fulfilment or waiver of the following
conditions precedent, which to the extent not satisfied or waived as at the time of the posting
of the offer circular (Circular) shall be included in the Circular, substantially in the form set
out in 5.1 to 5.3:
5.1. receipt of approvals, consents or waivers from the following regulatory bodies,
governmental or quasi-governmental entities necessary to implement the Proposed
Transaction (in each case either unconditionally or subject to conditions reasonably
acceptable to Bidvest):
5.1.1. the JSE;
5.1.2. the TRP (in terms of a compliance certificate to be issued in terms of the
Companies Act in relation to the Offer;
5.1.3. the South African Reserve Bank; and
5.1.4. the Competition Authorities;
5.2. The Acquisition Agreement has become unconditional and has been implemented in
accordance with its terms, save for non-implementation by reason of a breach by
Bidvest.
5.3. If the Scheme is used as the mechanism to implement the Proposed Transaction, the
Scheme will, in addition to the conditions precedent set out above, be subject to the
fulfilment or waiver by Bidvest (in whole or in part) of the following additional conditions
precedent :-
5.3.1. the approval of the Scheme by the requisite majority of Mvelaserve
shareholders in general meeting convened to approve the Scheme (Scheme
Meeting), as contemplated in Section 115(2) of the Companies Act, and to
the extent required, the approval of the implementation of such resolution by
the Court;
5.3.2. within thirty business days following the Scheme Meeting, Mvelaserve
shareholders exercise appraisal rights, in terms of Section 164 of the
Companies Act by giving valid demands in terms of Section 164(7) of the
Companies Act, in respect of no more than 5% of the issued ordinary shares
of Mvelaserve, provided that, in the event that Mvelaserve shareholders give
notice objecting to the Scheme as contemplated in Section 164(3) of the
Companies Act and/or vote against the resolutions proposed at the Scheme
Meeting in respect of no more than 5% of the issued ordinary shares of
Mvelaserve, this Condition shall be deemed to have been fulfilled at the time
of the Scheme Meeting;
6. FUNDING OF THE OFFER CONSIDERATION
Bidvest proposes to fund the full purchase consideration in cash from its own resources. The
TRP has been provided with a bank guarantee from The Standard Bank of South Africa
Limited in compliance with Regulations 111(4)(a) and 111(5) of the Companies Regulations,
2011.
7. PROHIBITED CONDUCT DURING THE OFFER PERIOD
Mvelaserve shall not do anything prohibited in terms of section 126 of the Companies Act
during the Offer Period and if any such prohibited conduct takes place during the Offer
Period, Bidvest shall have the absolute right to terminate the Proposed Transaction.
8. INDEPENDENT BOARD
The Transaction is classified as an affected transaction in terms of the Companies Act.
Accordingly, Mvelaserve has convened its Independent Board comprised of Gary Harlow,
Nolwandle Mantashe, Bongi Masinga, Nozuko Mbalula and Zukile Vokwana, in order for the
Independent Board to consider the terms of the Proposed Transaction.
The Independent Board will consider the terms of the Proposed Transaction within the
required period and will in due course announce to shareholders its views thereon together
with steps it proposes to take.
9. RESPONSIBILITY STATEMENT
Bidvest and the Independent Board accepts responsibility for the information contained in this
announcement, and to the best of their respective knowledge and belief, the information is
true and, where appropriate, this announcement does not omit anything likely to affect the
importance of the information included.
10. SALIENT DATES
Shareholders will be advised of the salient dates in a further announcement.
For all enquiries, please contact either:
Mvelaserve communication advisor: Bidvest communication advisor:
College Hill Aprio
Nick Williams or Frederic Cornet Julian Gwillim
011 447 3030 082 452 4389 / 011 268 0616
Johannesburg
13 May 2013
Advisors to Mvelaserve: Bridge Capital Advisors (Pty) Ltd
Legal Advisor to Mvelaserve: DLA Cliffe Dekker Hofmeyr Inc.
Communications Advisors to Mvelaserve: College Hill
Sponsor to Mvelaserve: RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Investment Bank, Sponsor and Transaction Advisor to Bidvest: Investec Bank Limited
Legal Advisor to Bidvest: ENS
Date: 13/05/2013 01:58:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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