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Small Related Party Transaction: Acquisition By GPI Of A Further 35% Of Mac Brothers
GRAND PARADE INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registration Number 1997/003548/06)
Share code: GPL
ISIN: ZAE000119814
(“GPI” or “the Company”)
SMALL RELATED PARTY TRANSACTION: ACQUISITION BY GPI OF A
FURTHER 35.00% OF THE ISSUED ORDINARY SHARE CAPITAL OF MAC
BROTHERS CATERING EQUIPMENT (PROPRIETARY) LIMITED (“MAC
BROTHERS”)
1. THE ACQUISITION
Shareholders are hereby advised that GPI has entered into
a sale of shares agreement dated 20 October 2014(“the
Agreement”) with, inter alia, Ranmac Management and
Holdings (Proprietary) Limited (“Ranmac”), Nadesons
Investments (Proprietary) Limited (“Nadesons Investments”)
and Razia Khan (collectively referred to as “the
Sellers”), in terms of which the Sellers have agreed to
sell 35.00% of the total issued ordinary share capital of
Mac Brothers (“the Sale Shares”) to the Company (“the
Acquisition”).
Following the successful implementation of the
Acquisition, Mac Brothers will be a wholly-owned
subsidiary of GPI.
2. DETAILS OF THE BUSINESS OF MAC BROTHERS
Mac Brothers was established in 2002 and is today, one of
the largest catering equipment manufacturers in South
Africa and one of the leading suppliers of catering
equipment and related services to the food service
industry in Africa.
Mac Brothers manufactures and supplies its own extensive
range of stainless steel catering and refrigeration
equipment and has well established agency agreements in
place to import, supply and service some of the top
international brands of food service equipment. In some
cases, certain international brands are manufactured under
licence in the Mac Brothers factory taking advantage of an
abundance of local stainless steel and well trained local
artisans and engineers. Mac Brothers has a well-
established and varied client base supplying from the
local corner coffee shop, bakery or restaurant through to
franchise groups, hotel groups, golf and wine estates,
staff canteen feeding organisations, prisons, hospitals,
mines as well as a large number of South Africa's finest
and world renowned restaurants. Mac Brothers is also a
patron sponsor of the South African Chefs Association and
is part of their program to inspire, train and promote up-
and-coming chefs to the industry.
The fabrication factory and head office is located in Cape
Town, with branches in Johannesburg, Durban and Harare.
Mac Brothers also has an extensive dealer network
throughout Africa including Namibia, Mozambique, Tanzania,
Kenya, Zambia, Botswana, Congo, Nigeria, Ghana, Uganda,
Angola, Seychelles and Mauritius.
3. RATIONALE FOR THE ACQUISITION
Mac Brothers is an established and professional business
that has proved its operational capabilities over a number
of years, some of which have been during difficult
financial periods that have seen a number of industry
players closing down. The technical capabilities of Mac
Brothers ensure that it is uniquely placed to gain market
share in a large and growing industry both locally and
throughout the African continent.
Mac Brothers has been approved by BURGER KING® Corporation
to manufacture and supply certain kitchen equipment for
BURGER KING® Restaurants through-out Africa. The kitchen
equipment required in a BURGER KING® Restaurant
represents, on average, one third of a BURGER KING®
Restaurants set-up cost, therefore the Acquisition will
allow GPI to reduce the BURGER KING® set-up costs.
As a result of the approval received from BURGER KING®
Corporation, Mac Brothers is able to supply kitchen and
catering equipment to any BURGER KING® Restaurant in
Africa and GPI, through its relationship with BURGER KING®
Corporation will seek further opportunities to supply and
export equipment to other BURGER KING® franchises around
the world.
Roughly 18% of Mac Brothers’ sales are made outside of
South Africa and accordingly, the Acquisition will give
GPI exposure to African markets, which are expected to
grow at a higher rate than South Africa and the rest of
the developed world. This exposure will assist GPI in
expanding the Burger King® franchise into Africa.
In addition, GPI has embarked on becoming the first local
manufacturer of slot machines and other gaming equipment.
As a large percentage of the component parts of a slot
machine consist of stainless steel, GPI intends to utilise
Mac Brothers’ expertise and resources for this purpose and
thereby reduce the overall manufacturing costs of slot
machines.
4. SMALL RELATED PARTY TRANSACTION
4.1 Due to one of the Sellers, namely Nadesons Investments,
being an associate of Mr Hassen Adams and Mr Alan Keet,
both directors of GPI, the Acquisition is deemed to be a
“related party transaction” in terms of section 10 of the
Listings Requirements of the JSE Limited (“JSE”).
4.2 However, as the Acquisition amounts to less than 5% of the
market capitalisation of GPI as at 20 October 2014 the
Acquisition is classified as a “small related party
transaction” in terms of section 10.7 of the JSE Listings
Requirements and written confirmation is required from an
independent expert confirming the fairness of the terms of
the Acquisition in relation to GPI shareholders.
4.3 Accordingly, GPI has appointed Mazars Corporate Finance
(Proprietary) Limited (“Mazars”) as the independent expert
to provide written confirmation of the fairness of the
Acquisition to GPI shareholders and to the JSE.
Shareholders will be advised in due course regarding
Mazars’ independent expert opinion, once same is
finalised.
4.4 This announcement is made for information purposes only
and no action is required by GPI shareholders with regard
to the Acquisition, subject to the approval of the
independent expert opinion by the JSE and the opinion
confirming that the Acquisition is fair to GPI
shareholders.
5. PURCHASE CONSIDERATION
The total consideration payable by the Company to the
Sellers for the purchase of the Sale Shares is the
aggregate of R23 755 017.85 to be paid to the Sellers
through a combination of cash and the issue of new GPI
Shares, which will be issued at the volume-weighted
average price (“VWAP”) per GPI share for the 30 (thirty)
day trading period immediately preceding the signature
date of the Agreement (“GPI Shares”), as set out below:
i) Ranmac – an amount of R13 574 320.62 payable in GPI
Shares;
ii) Nadesons Investments – an amount of R6 787 117.08
payable in cash; and
iii) Razia Khan – an amount of R3 393 580.16 payable in
cash.
6. CONDITIONS PRECEDENT
The Acquisition is subject to the fulfillment of the
following outstanding conditions precedent:
6.1. that on or before 31 October 2014, the parties comply, to
the extent necessary by law, with the JSE Listings
Requirements (including in relation to the issue of GPI
Shares to Ranmac on the closing date); and
6.2. that on or before 31 October 2014, excess cash will be
declared as a dividend by Mac Brothers to the current
shareholders of Mac Brothers (“the Dividend”).
7. OTHER SIGNIFICANT TERMS OF THE AGREEMENT
The Agreement provides for warranties and indemnities that
are normal for a transaction of this nature.
8. MAC BROTHERS FINANCIAL INFORMATION
The total value of the net assets of Mac Brothers, which
are the subject of the Acquisition, were R43 231 418 as at
30 June 2014.
The profits attributable to the net assets of Mac Brothers
that are the subject of the Acquisition were R6 550 293
for the year ended 28 February 2014. However subsequent to
its year end Mac Brother changed its financial year end to
30 June 2014 and the losses for the four month period
ending 30 June 2014 were R479 756.
9. EFFECTIVE DATE OF THE ACQUISITION
In terms of the Agreement, the effective date of the
Acquisition will be the 3rd (third) business day following
the date on which all the conditions precedent set out in
paragraph 6 above have either been fulfilled or waived,
which is expected to be before 31 October 2014 and/or,
should the condition precedent referred to in paragraph 6.2
above be waived, the date on which the Dividend is declared
or paid, whichever is the later.
Cape Town
20 October 2014
Sponsor and corporate advisor:
PSG Capital
Lead corporate advisor:
Leaf Capital
Legal advisor:
Bernadt Vukic Potash & Getz
Independent expert:
Mazars Corporate Finance (Proprietary) Limited
Date: 20/10/2014 05:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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