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ANCHOR GROUP LIMITED - Announcement relating to the acq of the entire issued share cap of Methwold Investments Pty Ltd and ren of caut

Release Date: 04/06/2015 12:28
Code(s): ACG     PDF:  
Wrap Text
Announcement relating to the acq of the entire issued share cap of Methwold Investments Pty Ltd and ren of caut

ANCHOR GROUP LIMITED
(formerly Andotorque Investments Proprietary Limited)
(Incorporated in the Republic of South Africa)
(Registration number 2009/005413/06)
(“Anchor” or “the Company”)
ISIN Code: ZAE000193389 JSE Code: ACG

ANNOUNCEMENT RELATING TO THE ACQUISITION OF THE ENTIRE ISSUED SHARE
CAPITAL OF METHWOLD INVESTMENTS PROPRIETARY LIMITED (“METHWOLD”) AND
RENEWAL OF CAUTIONARY ANNOUNCEMENT


INTRODUCTION
Further to the cautionary announcement published on 26 May 2015, shareholders
are advised that the Company has concluded a Sale of Shares Agreement (“the
Agreement”) with the Haiden Family Trust, Cuross Trust, Cowen Childrens' Trust and
AE McConnochie (“the Sellers”) in terms of which Anchor has acquired an initial 66%
of the issued share capital of Methwold and the later acquisition of the remaining
34% in Methwold (“the Acquisition”). The Sellers are not related parties to Anchor.
The effective date of the acquisition is 1 June 2015.

TERMS OF THE ACQUISITION
The consideration for the acquisition of the 66% shareholding is R91.465 million and is
to be settled by means of a cash amount of R72.825 million and the balance of
R18.640 million through the issue of 1 864 000 shares at R10.00 per share to the Sellers.

Anchor will acquire the remaining 34% of Methwold in four (4) annual tranches
based on a price earnings ratio of 8 times audited profit after taxation commencing
from the year ending 31 December 2016. The purchase consideration for the
remaining 34% has been capped at a maximum of the initial purchase
consideration.

DESCRIPTION OF THE BUSINESS BEING ACQUIRED
Methwold is an investment holding company which holds 100% in Robert Cowen
Investments (Pty) Limited (“RCI”) which is a niche asset management business that
manages segregated portfolios for private clients and institutions, and holds 100% in
Apollo Trustees (Pty) Limited (“Apollo”) which provides trust management services.

RCI is a well-run and respected business that looks after approximately 200 families
and has Assets Under Management of R3.8 billion as at the effective date. It was
started by Rob Cowen in 1982. Di Haiden and Alan McConnochie will continue to
run the business in the same manner in which it has always been run and are
contractually committed until at least the end of 2019.

RATIONALE FOR THE TRANSACTION
The Acquisition is in line with Anchor's strategic objectives at the time of listing to
expand and grow its business through acquisition of quality businesses and
attracting key talent and expertise to complement the Anchor Group.

The Anchor management team believes that the strong RCI culture of client service
and its focus on both local and offshore investments fits perfectly within the Anchor
culture. Anchor?s established asset management and research team (which runs
the Anchor BCI Equity fund which is the top performing in the country in its category
over 1 and 2 years), should be able to contribute successful investment ideas to the
RCI research team.

Over time, management believes there will be meaningful synergies, inter alia, in
research, unit trust and offshore investments.

RCI are excellent at providing a "one-stop-shop" for family wealth, with expertise in
trusts, estate planning (liaising, where appropriate, with tax experts and lawyers) to
ensure that families have an investment plan that maintains continuity and the
transfer and safeguarding of wealth for future generations.

CONDITIONS PRECEDENT AND CATEGORISATION
The Acquisition is subject to conditions precedent including regulatory and board
approval, to the extent necessary. The conditions precedent are to be met by
30 June 2015.

The Acquisition is categorised as a Category 2 acquisition in accordance with the
JSE Listings Requirements and accordingly approval by Anchor shareholders is not
required.

FINANCIAL INFORMATION
The net asset value of Methwold is R3.3 million and net profit after tax for the year
ended 28 February 2015 was R12.069 million.

Had the acquisition been in effect for the year ended 31 December 2014, the pro
forma effect on Anchor would have been:
- to increase Headline Earnings Per Share (HEPS) by 20%,
- to increase Adjusted Headline Earnings Per Share (AHEPS) by 18%; and
- to increase shares in issue by 1.3%.

RENEWAL OF CAUTIONARY ANNOUNCEMENT
Anchor is in other acquisition negotiations that, if concluded, may have an impact
on the price at which securities are traded. Accordingly, shareholders are advised to
continue to exercise caution until a further announcement is made.

Johannesburg
4 June 2015

                                 Designated Advisor
                       Arbor Capital Sponsors Proprietary Limited

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