Wrap Text
Brait’s proposed disposal of its 37.06% interest in Pepkor to Steinhoff and withdrawal of cautionary announcement
Brait SE
(Registered in Malta as a European Company)
(Registration No. SE1)
Share Code: BAT ISIN: LU0011857645
Share Code: BATP ISIN: MT0000680208
(“Brait” or “the Company”)
DETAILED TERMS ANNOUNCEMENT RELATING TO BRAIT’S PROPOSED DISPOSAL OF ITS EFFECTIVE 37.06%
ECONOMIC INTEREST IN PEPKOR HOLDINGS PROPRIETARY LIMITED (“PEPKOR”) TO STEINHOFF
INTERNATIONAL HOLDINGS LIMITED (“STEINHOFF”) AND WITHDRAWAL OF CAUTIONARY
ANNOUNCEMENT
1. Introduction
Further to the cautionary announcements released on the website of the Luxembourg Stock Exchange
(“LuxSE”) and on the Stock Exchange News Service (“SENS”) of the Johannesburg Stock Exchange (“JSE”)
on 19 September 2014 and on 3 November 2014, holders of ordinary shares with a par value of €0.22
each in Brait (“Shareholders”) are advised that Brait’s subsidiary, Brait Mauritius Limited (“Brait
Mauritius”), has entered into a sale of shares agreement with Steinhoff in terms of which Steinhoff will
acquire Brait’s effective 37.06% interest in Pepkor (“Brait Transaction”).
Furthermore, as detailed in the SENS announcement released by Steinhoff today, 25 November 2014,
Steinhoff has also entered into agreements to acquire Titan Premier Investments Proprietary Limited’s
(acting through various wholly-owned subsidiaries) effective 52.47% interest in Pepkor (“Titan
Transaction”).
Furthermore, Steinhoff has entered into agreements with certain management of Pepkor to acquire a
further effective 2.81% interest in Pepkor (“Pepkor Management Transaction”).
As a result of the Brait Transaction, the Titan Transaction and the Pepkor Management Transaction,
Steinhoff will hold an effective interest of 92.34% in Pepkor, with the Pepkor management holding the
balance of the effective interest in Pepkor.
2. Description of business carried on by Pepkor
Founded in 1965 and headquartered in Cape Town, Pepkor is a leading South African based retailer
selling mainly clothing, footwear, housewares, personal accessories, cellular products and financial
services. Retail interests are focused on the cash retail value market and exposure to LSM 1-6
categories, operating in 16 countries across 3 continents (Africa, Australia and Europe). Pepkor employs
c.32,000 people and has an extensive store network operating over 3,700 retail stores representing 12
main retail brands. The core businesses of Pepkor are Pep, Ackermans and Pepco.
3. Terms of the Brait Transaction
Brait, through Brait Mauritius, currently holds its effective 37.06% interest in Pepkor via a direct 23.86%
holding in the ordinary share capital of Pepkor and an indirect stake of 13.20% held via Newshelf 1093
Proprietary Limited (“Newshelf”).
The consideration to be paid by Steinhoff for acquiring Brait’s effective interest in Pepkor amounts to
R26.4 billion (“Brait Transaction Price”). The Brait Transaction Price will be settled through a
combination of (i) a cash amount of R15 billion (“Cash Consideration”) and (ii) the issue of 200 million
ordinary shares in Steinhoff (“Steinhoff Consideration Shares”) at an issue price of R57.00 per Steinhoff
Consideration Share. Subject to the fulfilment of the conditions precedent outlined in paragraph 6 of
this announcement, the Brait Transaction is expected to be implemented by no later than two business
days after 31 May 2015.
In the event that the Brait Transaction is not completed by 28 February 2015, Brait will be entitled to an
increase in the Cash Consideration at a rate of 7% per annum. Furthermore, Steinhoff will guarantee
the shortfall to Brait, if any, between the issue price of the Steinhoff Consideration Shares (R57.00) and
the gross value realised by Brait on the sale of each Steinhoff Consideration Share, for a period of 12
months from the date of issue of the Steinhoff Consideration Shares.
The Brait Transaction Price effectively values 100% of Pepkor at R73.382 billion Enterprise Value or EV.
The Board of Directors of Brait (“Brait Board”) has considered the terms and conditions of the Brait
Transaction and has agreed to support the Brait Transaction. Consequently, the Brait Board will
recommend the approval of the Brait Transaction to Shareholders, subject to the fulfilment of the
conditions precedent to the Brait Transaction, including Shareholder approval. In the interests of good
governance and fairness to all Shareholders, the Brait Board undertook to procure a fairness opinion
from an independent professional expert, indicating whether the terms of the Brait Transaction are fair
to Shareholders. Ernst & Young Advisory Services (Pty) Limited was appointed as the independent
professional expert (“Independent Expert”) to consider the terms and conditions of the Brait
Transaction. Taking into consideration the terms and conditions of the Brait Transaction, the
Independent Expert is of the opinion that the terms and conditions of the Brait Transaction are fair to
the Shareholders.
4. Rationale for the Brait Transaction
The Brait Board believes that Brait has been presented with an opportunity to realise its investment in
Pepkor at an attractive valuation. In addition, Brait retains the upside on the Steinhoff Consideration
Shares. The Steinhoff Consideration Shares present an attractive investment exposure for Brait, whilst
Brait has procured an underpin for the value of its Steinhoff Consideration Shares for a period of 12
months.
Furthermore, Brait is investigating a number of exciting investment opportunities that may add
significant value for Shareholders. Proceeds from the Brait Transaction will be used to pursue these
opportunities.
5. Net Asset Value (NAV) impact resulting from the Brait Transaction
As a result of the Brait Transaction, the pro forma 30 September 2014 NAV per Brait share will increase
by 76.7% to R61.35, before transaction costs, which are expected to be approximately R50 million (c.10
cents per share). The pro forma NAV of Brait following the Brait Transaction, before transaction costs, is
as reflected in the table below:
Unaudited Pro forma Pro forma
30 September Adjustments 30 September
2014 Brait 2014
Notes Total Transaction Total
R'm R'm R'm
Investments 18,415 (146) 18,269
Pepkor 1 11,546 (11,546) -
Steinhoff 1 - 11,400 11,400
Premier 3,862 - 3,862
Iceland Foods 1,400 - 1,400
Other investments 1,607 - 1,607
Loan receivable 548 - 548
Cash and cash equivalents 2 622 13,875 14,497
Property and equipment - - -
Accounts receivable 333 - 333
Total assets 1 19,918 13,729 33,647
Borrowings - - -
Accounts payable and provisions (19) - (19)
Total liabilities (19) - (19)
Preference share equity (1,964) - (1,964)
NAV: ordinary shareholders 17,935 13,729 31,664
No. of issued ordinary shares (#'m) excluding
treasury 516.2 - 516.2
NAV per share (Rands) 34.75 26.60 61.35
Notes
R'm
1 Pro forma increase in Brait's 30 September 2014 reported NAV
Brait Transaction Price 26,400
Cash Consideration 15,000
Steinhoff Consideration Shares 11,400
Less: Brait's share of Newshelf gearing (50.85% of R2.214bn as at
30 September 2014) (1,125)
Net proceeds to Brait 25,275
Less: Brait's reported 30 September 2014 carrying value for Pepkor (11,546)
Pro forma increase in NAV 13,729
2 Pro forma increase in cash and cash equivalents
Cash Consideration 15,000
Less: settlement of Brait's share of Newshelf gearing (1,125)
Pro forma increase 13,875
6. Conditions precedent
The implementation of the Brait Transaction is subject to the fulfilment of conditions precedent that
are usual for a transaction of this nature, including:
- the Shareholders approving the Brait Transaction;
- the ordinary shareholders of Steinhoff approving the Brait Transaction;
- the unconditional approval of the Brait Transaction by the South African competition authorities
and such foreign anti-trust authorities as may be required in other relevant jurisdictions;
- the South African Takeover Regulation Panel approving the Brait Transaction or exempting the Brait
Transaction from complying with the Takeover Regulations;
- the financial surveillance department or an authorised dealer of the South African Reserve Bank
approving the Brait Transaction;
- the conclusion and implementation of the Titan Transaction; and
- the Brait Transaction agreements becoming unconditional in accordance with their terms.
7. Posting of circular
Shareholders are advised that a circular containing full details of the terms of the Brait Transaction and
incorporating a notice of extraordinary general meeting (“Extraordinary General Meeting”) containing
the necessary resolution(s) to be approved by Shareholders in order to implement the Brait
Transaction, is expected to be posted to Shareholders on or about Friday, 12 December 2014.
8. Salient dates and times
Circular expected to be posted to Shareholders on or about Friday, 12 December 2014
Record date to be entitled to participate in and vote at the
Extraordinary General Meeting Friday, 16 January 2015
Last day to submit forms of proxy in respect of the Extraordinary
General Meeting by 11:00 Central European Time / 12:00 South Monday, 26 January 2015
African time on
Extraordinary General Meeting to be held at 4th Floor, Avantech
Building, St. Julian’s Road, San Gwann, SGN 2805, Malta at 11:00 Tuesday, 27 January 2015
Central European Time / 12:00 South African time on
Results of the Extraordinary General Meeting published on the
Tuesday, 27 January 2015
website of the LuxSE and on SENS on
Notes:
1. The abovementioned times and dates are subject to change. Any material changes will be published on the website of
the LuxSE and on SENS.
2. Any form of proxy not delivered by the stipulated date and time may be handed to the chairperson of the Extraordinary
General Meeting at any time before the appointed proxy exercises any of the Shareholder rights at the Extraordinary
General Meeting.
9. Withdrawal of cautionary announcement
Shareholders are advised that, as a result of the publication of this announcement, the cautionary
announcements of 19 September 2014 and 3 November 2014 are hereby withdrawn and that caution is
no longer required to be exercised by Shareholders when dealing in their Brait shares.
Malta
25 November 2014
The Company’s primary listing is on the Euro MTF market of the LuxSE and its secondary listing is on the
JSE.
Financial adviser and sponsor to Brait
Rand Merchant Bank (A division of FirstRand Bank Limited)
South African attorneys
Webber Wentzel
International legal adviser
M Partners S.à r.l. (A member of Maitland Legal)
Independent professional expert
Ernst & Young Advisory Services (Pty) Limited
Date: 25/11/2014 09:03:00 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 
