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CURRO HOLDINGS LIMITED - Update on events relating to Advtech offer and withdrawal of cautionary announcement

Release Date: 29/07/2015 13:30
Code(s): COH     PDF:  
Wrap Text
Update on events relating to Advtech offer and withdrawal of cautionary announcement

Curro Holdings Limited
Incorporated in the Republic of South Africa
(Registration number: 1998/025801/06)
JSE Share Code: COH
ISIN: ZAE000156253
(“Curro” or “the Company”)

UPDATE ON EVENTS RELATING TO ADVTECH OFFER AND WITHDRAWAL OF CAUTIONARY
ANNOUNCEMENT

Shareholders are referred to the Company’s cautionary announcements dated
12 June 2015 and 22 July 2015, as well as the Company’s subsequent
announcement dated 23 July 2015. Further to the Advtech’s board’s
rejection of Curro’s amended offer and the fact that same lapsed yesterday
afternoon at 17h00, shareholders are advised that:

1.   Curro negotiated in good faith believing that the two companies could
     create a new sizeable mid-cap company with benefits to all
     stakeholders, a belief that we thought was shared by Advtech
     management;

2.   Curro management as well as Advtech management agreed upfront that
     Advtech’s ethos, values and brands would be retained (as in previous
     acquisitions done by Curro) and that an information process with
     Advtech teachers and parents would be followed to manage any
     potential uncertainty – Advtech has subsequently stated that it was
     uncertain what will happen to same and their comments created
     definite uncertainty amongst Advtech stakeholders;

3.   Curro's offer was conditional on a limited due diligence
     investigation (excluding Advtech's strategic plans and other
     competition-sensitive matters) for, inter alia, the following
     reasons: Advtech has three operating divisions, which makes its model
     more complex; its financial reporting needs to be unpacked for Curro
     to fully understand its underlying business models as well as
     performance; it made several acquisitions that only became effective
     after 1 January 2015 and therefore have not been satisfactorily
     disclosed in the publicly available financial information; Curro was
     led to believe that some of Advtech schools operate under lease
     agreements which could have a significant negative impact on a school
     business in the future (this information was also not sufficiently
     reported on in Advtech's financials);

4.   Mr Chris Boulle, Advtech's independent chairman, in statements to the
     media yesterday, made it clear that from an Advtech perspective,
     there were absolutely no synergies if they are acquired by Curro. Mr
     Frank Thompson made a similar remark at a Macquarie conference last
     Friday, 24 July 2015;

5.   The Curro offer price of R13 per share represents a 42% premium to
     the 30 day volume weighted average price of Advtech at 28 April 2015
     and a 62% premium to the R8.02 share price at which Advtech recently
     issued shares to acquire Maravest) and included potential head office
     cost saving synergies (not savings at a school level, as some of
     Advtech’s leadership have now implied). The fact that Advtech
     management and its board now believe that no savings are possible,
     makes it impossible for Curro to justify a price of R13 per Advtech
     share and to pay R6bn for Advtech. Curro can therefore, without being
     able to perform a limited due diligence to obtain more information to
     verify cost savings, not proceed with a general offer to all Advtech
     shareholders at R13 per share;

5.   We wish to thank the more than 50% of Advtech shareholders who
     supported our offer both verbally and in writing.

Accordingly, caution is no longer required to be exercised by shareholders
when dealing in the Company’s securities.

29 July 2015
Durbanville

Corporate advisor and sponsor
PSG Capital Proprietary Limited

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