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Acquisition Of AspiviaUnison And Withdrawal Of Cautionary Announcement
ADAPT IT HOLDINGS LIMITED
Incorporated in the Republic of South Africa
(Registration number: 1998/017276/06)
Share code: ADI ISIN: ZAE000113163
(“Adapt IT” or “the Group”)
ACQUISITION OF ASPIVIAUNISON AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
The board of directors of Adapt IT (“the Board”) is pleased to inform shareholders that Adapt IT’s wholly-
owned subsidiary, Adapt IT Proprietary Limited (“the Purchaser”), has entered into a Share Purchase
Agreement (“Agreement”) dated 27 October 2014 (“Signature Date”) with Rubistar Proprietary Limited
(“Rubistar”), In2itive Proprietary Limited (“In2itive”) and Darryn Sean Trefz (“Darryn”) (“collectively
referred to hereinafter as “the Sellers”) in terms of which the Purchaser will acquire the “Sold Equity”,
as detailed hereafter, from the Sellers as one indivisible transaction in accordance with the terms of the
Agreement, for a maximum purchase price of R200 million (“the Acquisition”).
The “Sold Equity” comprises the Sold Shares and the Sold Claims.
The “Sold Shares” comprise 100% of the issued and outstanding shares and share capital in
AspiviaUnison Proprietary Limited (“AspiviaUnison”).
The “Sold Claims” comprise all of the claims on loan account or otherwise of Rubistar, In2itive, Darryn
and any person related or inter-related to either of them against AspiviaUnison and its subsidiaries
(“AspiviaUnison Group”) excluding an amount of R2.9 million owing in aggregate by Rubistar and
In2itive to AspiviaUnison (“Rubistar and In2itive Debt”).
2. THE ACQUISITION
2.1 Nature of the AspiviaUnison business
The AspiviaUnison Group is a cloud telecommunications intelligence and management solutions
provider. With over 14 years’ experience in the field of telecommunications management within
Southern Africa, AspiviaUnison Group provides Telecommunications Lifecycle Management
(“TLM”), Telecommunications Management Services (“TMS”) and Mobile Device Spend
Management (“MDSM”) software solutions. The products of the AspiviaUnison Group comprise
several crucial forward-looking telecommunications intelligence services that provide business
intelligence on telecommunications billing information for a more uniform and understandable billing,
integration of billing data with enabling technologies and understanding and control of mobile device
spend.
AspiviaUnison Group has a reputation of having substantial experience in the TMS market and
flexible, robust technology solutions that focus on supporting customers' business needs in an ever-
changing communications landscape. AspiviaUnison Group has expert understanding of how best to
manage the costs attached to communications services and environments, and combines this
insight with innovative technologies to assist customers in realising cost savings, boosting
productivity and maximising the benefits of telecommunications.
2.2 The rationale for the Acquisition
The Acquisition will add another significant pillar to Adapt IT’s growing vertical software solutions set.
The Acquisition, which is in line with Adapt IT's strategy of targeted acquisitive growth, will enable
the Adapt IT Group to further diversify and bolster its customer base, especially in the Financial
Services Industry (FSI) and the wider Private and targeted Public Sector markets.
2.3 Purchase price
The maximum purchase price payable by the Purchaser to the Sellers (in the proportion as to
Rubistar: 56.6%, In2itive: 42.4% and Darryn: 1% (“Allocations”)) as consideration for the Sold
Equity, being R200 million (“Purchase Price”), is comprised of:
2.3.1 an amount of R72 million (“Purchase Price (Base Portion)”), being the minimum amount
payable as consideration for the Sold Equity, which is contingent upon the delivery of the
Sold Shares and the concomitant cession of the Sold Claims (“Closing”) and is payable as
follows:
2.3.1.1 R36 million in cash on the date of Closing (“Closing Date”) to Darryn in his
proportionate Allocation, and to each of Rubistar and In2itive in their proportionate
Allocations (net of their respective deductions pertaining to R2.9 million of the
Rubistar and In2itive Debt, which amount will be paid directly to AspiviaUnison); and
2.3.1.2 R36 million in cash on or before 31 March 2015; and
2.3.2 a maximum amount of R128 million (“Purchase Price (Contingent Earn-Out Portion)”),
which is contingent upon the achievement by AspiviaUnison of the following performance
warranties (“Performance Warranties”):
- R29.4 million profit after tax (“PAT”) for the period 1 September 2014 to 30 June 2015
(“1st Performance Warranty Period”);
- R40.1 million PAT for the period 1 July 2015 to 30 June 2016 (“2nd Performance
Warranty Period”); and
- R21.1 million PAT for the period 1 July 2016 to 31 December 2016 (“3rd Performance
Warranty Period”).
The Purchase Price (Contingent Earn-Out Portion) is payable as follows:
2.3.2.1 as soon as possible after the Closing Date, the issue of ordinary shares in the
authorised but unissued share capital of Adapt IT (“Conditional Consideration
Shares”) to the value of R48 million, to be pledged to the Purchaser as security for
performance as against the Performance Warranties, and will only vest
unconditionally in the Sellers upon achievement of at least R54.4 million cumulative
PAT; and
2.3.2.2 subject and pro rata to achievement of the Performance Warranties, up to a further
R80 million which is payable 60% in cash and 40% by the issue of further
Conditional Consideration Shares:
2.3.2.2.1 in respect of achievement in aggregate of the Performance Warranties
in respect of the 1st and 2nd Performance Warranty Periods, and up to
15% advance achievement of the Performance Warranties in respect of
the 3rd Performance Warranty Period, if any, by the later of 30
September 2016 and the final determination of any dispute which may
arise in the determination of the PAT pertaining to the Profit Warranties;
and
2.3.2.2.2 in respect of achievement in aggregate of the outstanding Performance
Warranties as at the end of the 3rd Performance Warranty Period, if
any, by the later of 31 March 2017, or the final determination of any
dispute which may arise in the determination of the PAT, to the extent
that the Purchase Price (Contingent Earn-Out Portion) has not already
been paid.
The number of Conditional Consideration Shares to be issued, in each applicable
instance thereof, shall be calculated by dividing the corresponding amount of the
relevant Purchase Price instalment by the Weighted Average Traded Price of Adapt
IT shares for a period of 30 trading days prior to the relevant date as specified in the
Agreement.
Any outstanding payments will accrue interest of 1% above the prime rate from payment due date
until the date of payment in full.
2.4 Conditions to Closing and effective date
Closing is subject to the fulfilment (or, to the extent permissible, the waiver) of the following
outstanding key conditions:
2.4.1 approval or exemption of the Acquisition by the Takeover Regulation Panel;
2.4.2 each of In2itive and Rubistar approving the Agreement and its implementation, and the
Acquisition in accordance with the provisions of, inter alia, sections 112 and 115 of the
Companies Ac, 2008 (Act 71 of 2008) , as amended; and
2.4.3 the Purchaser securing a R30 million working capital loan facility from its bank.
Upon Closing, the Acquisition will take retrospective effect from 1 September 2014 (“the Effective
Date”). The Acquisition may be cancelled by either the Purchaser or the Sellers if any of the
conditions precedent have become incapable of fulfilment or if Closing does not occur prior to
12 December 2014.
2.5 Adapt IT Integration
After Closing, the parties to the Agreement shall procure that all companies (other than dormant
companies) within the AspiviaUnison Group are integrated into the Adapt IT Group in accordance
with the terms of the Agreement.
Subsequent to the Acquisition, the Memoranda of Incorporation of AspiviaUnison and its
subsidiaries will be reviewed to ensure that they do not prevent Adapt IT from complying with its
obligations in terms of the Listings Requirements of JSE Limited.
2. THE VALUE OF, AND PROFITS ATTRIBUTABLE TO, ASPIVIAUNISON
The value of the net assets that are the subject of the Acquisition as at 28 February 2014 was
R17 140 117. The profit after tax attributable to the net assets that are the subject of the Acquisition for
the year ended 28 February 2014 was R15 389 347.
3. CLASSIFICATION OF THE ACQUISITION
The Acquisition is classified as a Category 2 transaction in terms of the Listings Requirements of JSE
Limited.
4. WITHDRAWAL OF CAUTIONARY
Further to the cautionary announcement released on SENS on 21 October 2014, shareholders are
advised that further to this announcement regarding the Acquisition, shareholders no longer need to
exercise caution when dealing in Adapt IT’s securities.
28 October 2014
Sponsor
Merchantec Capital
Purchaser’s Attorneys
Garlicke and Bousfield Incorporated
Date: 28/10/2014 11:29:00 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.
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