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SUPER GROUP LIMITED - Acquisition of NLC Proprietary Limited

Release Date: 17/11/2015 08:34
Code(s): SPG     PDF:  
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Acquisition of NLC Proprietary Limited

Super Group Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1943/016107/06)
Share code: SPG
ISIN: ZAE000161832
(“Super Group”)

ACQUISITION OF NLC PROPRIETARY LIMITED

  1. Introduction and overview of the NLC Acquisition

     1.1. SG Fleet Group Limited (“SG Fleet”), a subsidiary of Super Group
          listed on the Australian Stock Exchange (ASX: SGF), has concluded
          an agreement with Lanlow Pty Ltd, NLT Pty Ltd, D Wilson Holdings
          Pty Ltd and Mfsquared Pty Ltd to acquire 100% of the ordinary
          shares in issue of NLC Proprietary Limited (“NLC”) (“the NLC
          Acquisition”).

     1.2. Nature of business

          NLC is headquartered in South Melbourne, with a national
          Australian presence, and employs approximately 140 staff. NLC has
          been at the forefront of novated product development and consumer
          vehicle finance since its establishment by Matt Reinehr in 1990.

          NLC derives revenue from a variety of sources related to its core
          novated offering, including insurance broking, and has continued
          to add new streams as it moves into adjacencies. In recent years,
          it has expanded into the provision of vehicle finance in the form
          of consumer loans, and further developed its vehicle sourcing
          services. NLC writes mostly finance leases and funds via a
          principal and agency structure similar to that of SG Fleet.

          The low concentration, blue-chip customer book is predominantly
          made up of private sector entities, with a strong presence in the
          education sector and a growing government exposure.

          Earnings before interest, taxation, depreciation and amortisation
          (“EBITDA”) for the 2015 financial year was AUD24.7 million, and
          the business achieved a compound annual growth rate in EBITDA over
          the past three years of 17.1%.

          The management of NLC will be remaining with NLC post the NLC
          Acquisition.

  2. Purchase Consideration

     Note: the exchange rate used in this document is AUD1 = ZAR10,15.

     The purchase consideration for the NLC Acquisition is AUD200,0 million
     (ZAR2,03 billion) which comprises AUD46 million (ZAR466,9 million)of
     net cash on NLC’s balance sheet, equating to an enterprise value of
     AUD154 million (ZAR1,56 billion).
  SG Fleet will fund the NLC Acquisition with AUD110 million (ZAR1,12
  billion) of new debt, the issue of 9,1 million new shares in SG Fleet
  at AUD2,95 per share with a total value of AUD26 million (ZAR263,9
  million) to the sellers and the balance of AUD64 million (ZAR649,6
  million) from cash resources in SG Fleet. Super Group will hold 52.1%
  of the issued share capital of SG Fleet following the NLC Acquisition.

3. Net assets acquired and profits attributable to those assets

  The net asset value of the NLC Acquisition will be approximately
  AUD0,33 million (ZAR3,4 million). The profit after taxation associated
  with these assets is AUD16,8 million (ZAR170,5 million).

  The NLC Acquisition is expected to be earnings accretive to Super Group
  after acquisition costs and amortization of intangibles in the year to
  30 June 2016.

4. Rationale for the NLC Acquisition

  Super Group’s strategy over the past five years has been to make
  selective acquisitions in its core businesses namely Supply Chain,
  Fleet Management and Dealerships in South Africa and internationally.
  SG Fleet’s strategy is aligned to Super Group’s strategy in making
  selective acquisitions in Fleet Management and related services
  businesses.

  The NLC Acquisition is consistent with SG Fleet’s multiple pillar
  growth strategy and furthers a number of the objectives at the same
  time. It will allow SG Fleet to gain market share by enhancing SG
  Fleet’s offering and service, create a wider range of products
  available to both sets of existing customers, and support SG Fleet’s
  diversification into related businesses by gaining exposure to
  consumer-style solutions.

  The two brands of NLC and SG Fleet, which will both be retained, bring
  to the table specific attributes in terms of products, expertise, sales
  approach, customer book and scale. Both companies have an established
  position in the market and distinct differentiators that can be
  leveraged across the combined business. Together, this makes for a very
  formidable blend of products and expertise along with enhanced
  efficiency.

  In addition to its core tool-of-trade and novated offering, SG Fleet
  currently provides a wide range of accessories and an extended warranty
  product, while NLC boasts additional expertise in consumer-style
  products and insurance. As it offers operating leases, SG Fleet also
  has extensive experience in the management of residual values and the
  vehicle disposal process. In turn, NLC contributes forward thinking and
  capabilities in terms of vehicle procurement in the consumer space.
  Additional benefits will be extracted from NLC’s novated customer base
  namely an opportunity for SG Fleet’s tool-of-trade offering and
  increased sourcing and funding scale.
  5. Conditions precedent

    There are no conditions precedent to the completion of the NLC
    Acquisition.

  6. Effective date

    The effective date of the NLC Acquisition is expected to be 30 November
    2015.

  7. JSE Limited (“JSE”) Listings Requirements

    Subsequent to the implementation of the NLC Acquisition, the
    certificate of incorporation and articles of association of NLC will be
    reviewed to ensure that the provisions of such constitutional documents
    do not prevent Super Group from complying with its obligations in terms
    of the JSE Listings Requirements.

  8. JSE categorisation

    The NLC Acquisition is a category 2 transaction in terms of paragraph
    9.5(a) of the JSE Listings Requirements.

  Further details on the NLC Acquisition will be available on Super Group’s
  website www.supergroup.co.za and SG Fleet’s website www.sgfleet.com from
  Wednesday 18 November 2015.


Sandton
17 November 2015

Sponsor: Deutsche Securities (SA) Proprietary Limited

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