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Acquisition by Advtech of 100% of The Maravest Group
ADvTECH Limited
(Incorporated in the Republic of South Africa)
(Registration number 1990/001119/06)
Share code: ADH ISIN: ZAE000031035
("the Company" or “ADvTECH”)
ACQUISITION BY ADvTECH OF 100% OF THE MARAVEST GROUP COMPRISING MARAVEST,
MARAMEDIA, SHETLAND INVESTMENTS, FUTURE INDEFINITE INVESTMENTS 82 AND THEIR
SUBSIDIARIES (“the Acquisition”), WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT AND
SPECIFIC ISSUE OF SHARES.
1. Acquisition of Maravest Group
1.1. Introduction
The board of directors of ADvTECH is pleased to announce that it has concluded comprehensive
agreements for the acquisition of the Maravest Group. In terms of the agreements, ADvTECH will
acquire 100% of the shares in and claims on loan account against Maravest (Pty) Ltd, Maramedia
(Pty) Ltd, Shetland Investments (Pty) Ltd and Future Indefinite Investments 82 (Pty) Ltd (“the
Maravest Group”).
The acquisition of the Maravest Group strengthens ADvTECH’s position as the leading private school
provider in the premium school market while also providing an entry point into the lower fee and low
fee markets.
1.2. Description of the Business of the Maravest Group
The Maravest Group includes nursery, pre-primary, preparatory and high school phases through a
number of models.
It owns and operates three premium co-educational independent schools, being the well-established
Maragon Ruimsig and Charterhouse Preparatory in Honeydew, and Maragon Avianto which opens in
2015. Two lower fee schools, Maragon Olympus and Maragon Raslouw, are situated in Pretoria East
and Centurion respectively. In addition, Maravest has a management contract with Edendale, a low
fee school in Pretoria North.
The campuses vary in size and facilities. Maragon Ruimsig and Charterhouse Preparatory are
comprehensively resourced with teaching, extramural and sporting infrastructures. Maragon Avianto
is a parallel medium school, offering instruction in both English and Afrikaans, thus drawing its
students from the wider society, including the Afrikaans-speaking community.
The Schools presently have 4 443 students enrolled from nursery school to grade 12. With the
exception of Maragon Avianto, the schools are established and all are profitable. Plans are in place to
increase enrolments to 6 300 students by 2020.
The Maramedia arm of the Maravest Group creates and distributes digital curriculum content for
schools and home schooling. They have recently extended the sale of this content to schools outside
the Maravest Group.
1.3. Rationale for the Acquisition
ADvTECH is pursuing an active investment and growth strategy evidenced by the investment of
R1 billion over the past six years. This has resulted in significant growth in student capacity and
numbers, especially in the Schools division. ADvTECH seeks to acquire businesses that complement
the Company’s core operations and enable growth in the markets within which it operates while also
providing access to new markets, such as lower fee schools. The Maravest Group represents an
established platform for further rapid growth and expansion of the ADvTECH Schools division by
injecting six new sites which will increase current enrolments by some 32%. The Maragon Schools
are recognised as leading independent schools and are located in growing nodes in or near Gauteng,
South Africa’s most populous and economically vibrant province. The Maragon Schools share a
Christian centred ethos, although each retains a unique individual character. Charterhouse is a value-
driven school deeply steeped in the Cambridge tradition. The acquisition diversifies the existing
ADvTECH Schools portfolio and provides ADvTECH with critical mass in the areas where the
Maragon and Charterhouse Schools operate. The Maragon and Charterhouse Schools will remain
separate brands within the ADvTECH Schools division and provides an opportunity to build on their
existing ethos to grow the brands beyond the present planning by the opening of additional schools.
The management team will join the ADvTECH Group.
The Maragon and Charterhouse Schools are expected to contribute to the academic and educational
reputation of ADvTECH as well as to enhance earnings and cash flow as unutilised capacity is filled
and further investments are planned.
1.4. Strategic Implications
ADvTECH has previously reported on progress with its board-approved R3 billion capital investment
programme. While the present acquisition falls within the same strategy, it is not part of the
investment programme referred to above and shareholders are advised that the R3 billion plan
remains in place at the same level as previously reported.
ADvTECH is considering its balance sheet and capital financing requirements and further
announcements will be made in this regard once a decision has been made on the way forward.
1.5. Classification of the transaction
The Acquisition is classified as a Category 2 transaction in terms of the Listings Requirements of the
JSE Limited.
1.6. Vendors
Corvest 7 (Pty) Ltd and Kyocraft (Pty) Ltd (collectively “the Vendors”).
1.7. Effective date
The effective date of the Acquisition is 1 January 2015.
1.8. Purchase consideration
The aggregate equity purchase consideration payable for the acquisition of the Maravest Group is
R450 000 000 (four hundred and fifty million rand). ADvTECH will settle the obligation in a
combination of own cash and the issue of ADvTECH shares in a ratio still to be determined. A
maximum of 54 987 212 shares will be issued at an issue price of R7.82 per share, being the 30 day
VWAP as at 27 October 2014.
1.9. Conditions Precedent
The Acquisition is subject, inter alia, to the following outstanding conditions precedent:
- the requisite resolutions being passed by the Vendors;
- the receipt of consent to the Acquisition by the Gauteng Department of Education, to the
extent required;
- regulatory approvals, including the receipt of the unconditional approval of the Acquisition by
the Competition Authorities and the Takeover Regulation Panel; and
- the requisite shareholder approval being obtained to implement a specific issue of shares to
settle a portion of the purchase consideration.
1.10. Net assets and profits of the Maravest Group
The value of the net assets that are the subject of the Acquisition as at 31 October 2014 was R 50.5
million. The normalized profit after tax attributable to the net assets that are the subject of the
Acquisition for the 10 month period 1 January 2014 to 31 October 2014 was R 27.8 million, based on
the management accounts of the Maravest Group as at 31 October 2014.
2. Specific issue of shares
In order to settle the purchase consideration, the Company will be required to issue up to a maximum
of 54 987 212 ordinary ADvTECH shares at a price of R7.82 per share.
The Company has the requisite approvals to issue up to 3 935 878 shares via the general authority
obtained from shareholders at the General Meeting held on 27 May 2014. The Company is therefore
required to obtain the requisite shareholder approval to issue the remaining ordinary ADvTECH
shares that make up the balance of the purchase consideration.
A circular, including a notice of General Meeting, detailing the terms of the Specific Issue and actions
required by shareholders will be posted to shareholders in due course. Further announcements will be
made regarding any additional relevant dates including the date of the General Meeting.
3. Withdrawal of cautionary announcement
Following the release of this announcement, the cautionary announcement published by ADvTECH
on 31 October 2014 is hereby withdrawn and caution is no longer required to be exercised by
ADvTECH shareholders when dealing in ADvTECH shares.
Johannesburg
26 November 2014
Financial Advisors and Sponsor to ADvTECH: Bridge Capital Advisors (Pty) Limited
Attorney to ADvTECH: Cliffe Dekker Hofmeyr Inc
Communications Advisor to ADvTECH: Brunswick
Financial Advisor to Maravest Group and the Vendors: Arbor Capital (Pty) Limited
Legal Advisor to Maravest Group: Werksmans Attorneys
Date: 26/11/2014 01:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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