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Acquisition of: Parsec; 25% of Parsec (Pty) Ltd; 20% of Redline Telecommunications ; and further cautionary
Ansys Limited
(Incorporated in the Republic of South Africa)
(Registration number 1987/001222/06)
JSE Share Code: ANS ISIN: ZAE000097028
(“Ansys” or “the company”)
THE ACQUISITION OF:
- PARSEC HOLDINGS (PTY) LTD;
- REMAINING 25% OF PARSEC (PTY) LTD;
- REMAINING 20% OF REDLINE TELECOMMUNICATIONS SA (PTY) LTD;
AND FURTHER CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
1.1 Further to the cautionary announcement dated 27 October 2014 the board of directors of Ansys is
pleased to announce the acquisitions described below.
1.2 Ansys made an offer to the shareholders of Parsec Holdings (Pty) Ltd (“Parsec”), Parsec (Pty) Ltd
and Redline Telecommunications SA (Pty) Ltd (“the Sellers”) to purchase the following:
- 100% of the shares in and all shareholders claims against Parsec from Parsec shareholders;
- 25% of the shares in and all shareholders claims against Parsec (Pty) Ltd from the minority
shareholder of Parsec (Pty) Ltd; and
- 20% of the shares in and all shareholders claims against Redline Telecommunications SA (Pty)
Ltd from the minority shareholder of Redline Telecommunications SA (Pty) Ltd
(“the Acquisitions”).
1.3 Parsec comprises of the following investments:
- 75% interest in Parsec (Pty) Ltd;
- 80% interest in Redline Telecommunications SA (Pty) Ltd;
- 75% interest in Redline Technologies (Pty) Ltd; and
- 100% interest in Parsec Properties (Pty) Ltd, a property holding company, including land and
improvements on stands 3323 and 3318, Irene Ext. 72, City of Tshwane (“the property”).
1.4 The offer was accepted on 31 October 2014 (the “signature date”), subject to certain terms and
conditions as described below.
2. RATIONALE FOR THE ACQUISITIONS
2.1 The Acquisitions are another significant step for Ansys to become an Intellectual Property-led
provider of technology-driven engineering solutions, producing world-class products for global
distribution. Although Ansys and Parsec in general target the same markets, there is currently very
little overlap in terms of product and service offerings between the operations of these companies,
and the Acquisitions will provide Ansys with access to:
- intellectual property and the scarce skill sets of a sought after professional team including 45
engineers;
- an opportunity to diversify Ansys’ income streams by enhancing its mining safety, defence and
telecommunications divisions, as well as entry into the international defence market;
- new products for Ansys’ existing clients and markets;
- a modern production facility also utilised for third party contract manufacturing purposes; and
- general economies of scale benefits.
2.2 The Parsec businesses will furthermore benefit from Ansys’ unparalleled BEE credentials in these
sectors, as well as its foothold in the complementary railway, mining and telecommunications
markets providing access to Ansys’ existing clients and markets.
3. THE ACQUISITIONS
3.1 Parsec (Pty) Ltd is operating in the outsourced development and manufacturing market. The
company develops and produces customised electronic subsystems and products for clients in the
defence, industrial and telecommunication sectors. Parsec’s clients include Original Equipment
Manufacturers, system integrators, engineering companies and service providers.
3.2 Redline Telecommunications SA (Pty) Ltd is a Wireless and Data Infrastructure Solutions provider
in southern Africa. It is a supplier of wireless links and associated services to Network Operators,
Internet Service Providers and Data System Integrators. Redline is the preferred partner to private
and public enterprises in SA for the supply of wireless cabling and various network solutions.
3.3 Redline Technologies (Pty) Ltd manufactures carrier grade, point-to-point, Gigabit Optical Wireless
Broadband (OWB) equipment. It is focused on the enterprise, telecommunications and military
markets. Redline Technologies’ strength lies in OWB product development.
3.4 The property comprises of purpose-built combined offices and manufacturing facilities situated in
the Route 21 Corporate Park in Centurion. The building is in its final stages of construction and is
expected to be ready for occupation during December 2014.
4. TERMS AND CONDITIONS OF THE ACQUISITIONS
4.1 Ansys is purchasing the Acquisitions from the Sellers for:
- R86,500,000 (eighty six million five hundred thousand rand), plus
- R37,000,000 (thirty seven million rand) less the debt associated with the property on the
effective date which is expected to be approximately R30,300,000 (thirty million three hundred
thousand rand), resulting in a net consideration for the property of approximately R6,700,000
(six million seven hundred thousand rand),
payable as follows:
4.1.1 50% (fifty percent) of the consideration will be settled in cash (“cash component”) and the
remainder by issuing Ansys ordinary shares (“share component”) as set out below. However,
the 25% minority shareholder in Parsec (Pty) Ltd has agreed to receive 100% (one hundred
percent) of the consideration due to him in Ansys ordinary shares;
4.1.2 Cash component
- R20 million payable in cash on the effective date, being the first day of the month following
the closing date (closing of the transaction will occur five business days immediately
following the day on which the last of the suspensive conditions has been fulfilled or
waived). This payment will be subject to Parsec having a minimum Tangible Net Asset
Value of R35 million on the effective date, failing which the said amount will be reduced on
a rand-for-rand basis; and
- the remaining cash amount due will be payable in instalments of R2.5 million each
commencing twelve months after the effective date, then quarterly thereafter and accruing
interest at the prime interest rate. In the event that any instalment is in arrears and has not
been remedied within 30 business days (the “remedy period”), Parsec shareholders will
have the right to convert such instalment into ordinary shares in Ansys at an issue price
equal to the 60 day volume weighted average price (VWAP) on the date the instalment
became due and payable, subject to a minimum of 40 cents per share.
4.1.3 Share component
The amount due in shares will be effected through the issue of ordinary shares in Ansys on the
closing date at an issue price of 40 cents per share (“consideration shares”).
4.2 The Acquisitions are subject to the conclusion of formal agreements within 90 days of the signature
date and the fulfilment of inter alia the following suspensive conditions:
- successful conclusion of a due diligence on Parsec by Ansys and, on Ansys by Parsec;
- conclusion of requisite funding agreements by Ansys;
- approval of the Acquisitions by Ansys and Parsec boards of directors and shareholders;
- continuation of employment agreements with key staff members of Parsec as identified by
Ansys;
- conclusion of restraint of trade agreements with certain Parsec shareholders; and
- all the necessary regulatory approvals required.
4.3 Parsec will have the right to nominate two directors for election to the board of Ansys, at least one of
whom will be a non-executive director.
4.4 Certain restrictions have been placed on the sale and/or transfer of the consideration shares.
5. PRO FORMA FINANCIAL EFFECTS OF THE ACQUISITIONS
The financial effects will be published in due course.
6. CATEGORISATION OF THE ACQUISITIONS
The Acquisitions are a category 1 transaction as defined by the JSE Listings Requirements and have to
be approved by shareholders of Ansys. A circular to shareholders will be issued in due course.
7. FURTHER CAUTIONARY ANNOUNCEMENT
Shareholders are advised to continue to exercise caution in dealing in the company’s securities on the
JSE until such time as the financial effects of the Acquisitions are published.
8. FURTHER ANNOUNCEMENT
Shareholders will be notified once the circular in respect of the Acquisitions has been posted to
shareholders.
Corporate and designated advisor
Exchange Sponsors
3 November 2014
Johannesburg
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