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Announcement relating to the proposed unbundling by Bidvest, listing of BidCorp and withdrawal of cautionary
Bidvest Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1946/021180/06)
Share code: BVT
ISIN: ZAE000117321
(“Bidvest” or “the Company” or “the Group”)
Announcement relating to:
- the proposed unbundling by Bidvest;
- the listing of Bid Corporation Limited (“BidCorp”) on the JSE; and
- withdrawal of cautionary announcement.
1. Introduction
Shareholders of Bidvest (“Shareholders”) are referred to the announcement released on the Stock
Exchange News Service (“SENS”) of the JSE Limited (“JSE”) on February 8 2016 regarding the
proposed listing (“the Listing”) and subsequent unbundling of its foodservices business on the
main board of the JSE (“the Unbundling”).
The Unbundling is presumed, without confirmation, to constitute a section 112 disposal in terms of
the South African Companies Act, 71 of 2008, as amended (“the Companies Act”) and as such
Bidvest is required to consider the provisions of the Companies Act and the Takeover Regulations
in implementing the Unbundling. The Unbundling will result in Shareholders holding a direct
interest in BidCorp rather than holding that interest through Bidvest.
2. Background to and rationale for the Unbundling
The Bidvest Group is an international services, trading and distribution company listed on the JSE
and operating on five continents. We are proud of our South African roots and our place on the
JSE. At the same time, we have become a global business with further international growth on the
horizon both within our food and industrial businesses. The evolution of Bidvest into two distinct
businesses comprising Bidvest Industrial, a major diversified industrial group operating in
southern Africa employing c.117,000 people and generating turnover and trading profit of c.R93
billion and R5.7 billion respectively for the year ended June 30 2015 and Bidvest Foodservice, a
global foodservice business operating in multiple geographies, has been a natural progression
over many years. Both businesses have divergent strategic focuses and require different
management skills.
A clear separation of interests will provide for greater management focus and enable
management to identify opportunities both locally and abroad thereby increasing the scope for
entrepreneurial flair. Consequently, the board of directors of Bidvest (“the Board”) had decided to
separately list and unbundle the foodservice business from Bidvest thus creating two fit for
purpose businesses managed by focused teams that are better equipped to sustain and grow
their respective businesses.
The Board believes that the separation of BidCorp from the Bidvest Group will enable the
following:
- streamline the activities and operations of the Bidvest Group which will ensure an
improved platform from which to pursue continued growth;
- greater transparency with regard to the nature of the activities and geographies in which
each of BidCorp and the remainder of the Bidvest Group operate and their respective
potential values;
- improve management focus to assist in identifying acquisition opportunities both locally
and abroad and to enable management to mitigate and manage specific risks and
challenges faced by each individual business;
- enable the respective management teams of BidCorp and Bidvest to express their
entrepreneurial flair and take direct responsibility and accountability for the performance
and growth of the respective companies;
- enable smooth and transparent management succession, planning and implementation;
and
- provide flexibility to anticipate and react to changes within the specific market segments
and economic landscapes within which each company operates.
3. The Listing and the Unbundling
In order to give effect to the Listing and Unbundling, Bidvest will, prior to the Listing and
Unbundling:
- dispose of the all of the shares in Bidvest Food Africa Proprietary Limited (“Bidvest Food
Africa”), Bidvest Food Properties Proprietary Limited (“Bidvest Food Properties”) and the
Bidvest treasury shares (“the Transferring Assets”) to its wholly-owned subsidiary,
BidCorp, prior to the Listing, in terms of asset-for-share transactions and unbundling
transactions in accordance with the provisions of sections 42 and 46 of the Income Tax
Act 58 of 1962, as amended (the “Income Tax Act”) (“the Disposal”); and
- acquire EAS Zimbabwe (Pvt) Limited, EAS Zambia Limited and Bidvest Zambia Limited
(“the Excluded Assets”) from BidCorp in terms of an unbundling transaction in
accordance with the provisions of section 46 of the Income Tax Act (collectively, “the
Internal Restructuring”).
The net book value of the Transferring Assets being disposed of by Bidvest is approximately R2.8
billion and the net book value of the Excluded Assets being acquired by Bidvest is approximately
R6.2 million.
Subject to the fulfilment of the suspensive conditions as set out in paragraph 4 below, Bidvest will
distribute all of the BidCorp shares held by the Company to all of its Shareholders recorded in the
register at the close of business on Friday, June 3 2016 (“the Record Date”) by way of the
Unbundling, which shares will be listed on the JSE in the "Food Retailers and Wholesalers" sector
of the Main Board of the JSE.
Shareholders will indicatively receive 1 BidCorp share for every 1 Bidvest share held on the
Record Date (subject to the rounding convention applied by the JSE).
The general meeting of Shareholders to consider and, if deemed fit, pass the resolutions
necessary to give effect to the Unbundling will be held on or about Monday, May 16 2016 (“the
General Meeting”).
In terms of the Companies Act, the resolution to approve the Unbundling requires the approval of
at least a 75% majority of Shareholders present or represented by proxy at the General Meeting
and entitled to vote.
4. Suspensive conditions
The implementation of the Unbundling is subject to the fulfilment or waiver (by Bidvest, to the
extent permitted) of the following suspensive conditions on or before Tuesday, May 17 2016:
- the resolutions authorising the Unbundling shall have been passed by the requisite
majority of the votes of Shareholders at the General Meeting;
- Bidvest shall have obtained a 'binding class tax ruling' and a binding private tax ruling in
terms of sections 78 and 79 of the Tax Administration Act, 2011, in regard to the Disposal
and the Unbundling on terms satisfactory to the Board; and
- the Takeover Regulation Panel shall have issued a certificate of compliance in respect of
the Unbundling in terms of section 115 of the Companies Act.
5. Pro forma financial effects of the Unbundling
The table below sets out the pro forma financial effects of the Unbundling.
Based on Bidvest’s consolidated interim results for the period ended December 31 2015, the pro
forma financial effects of the Unbundling on the earnings per share (“EPS”), diluted EPS, headline
earnings per share (“HEPS”), diluted HEPS, normalised HEPS, net asset value (“NAV”) and
tangible NAV (“TNAV”) of the Bidvest Group are set out below.
These financial effects are prepared for illustrative purposes only in order to assist Shareholders
to assess the impact of the Unbundling and, because of their nature, may not give a fair
presentation of Bidvest’s financial position, changes in equity, results of operations or cash flows
after the Internal Restructuring and Listing nor the effect of the Unbundling on Bidvest's results of
operations.
The summarised pro forma financial effects have been prepared in a manner consistent in all
respects with International Financial Reporting Standards (“IFRS”), the accounting policies
adopted by Bidvest as at June 30 2015 and the Revised SAICA Guide on Pro Forma Financial
Information and the Listings Requirements of the JSE.
The pro forma financial effects are the responsibility of the Board. The material assumptions
used in the preparation of the pro forma financial effects are set out in the notes following the
table below.
6 months ended 6 months ended
December 31 2015 December 31
2015
Per Bidvest share Before the After the
Unbundling Unbundling
Unaudited Pro forma
EPS (cents) 930.9 414.3
Diluted EPS (cents) 925.8 412.1
HEPS (cents) 1 001.5 482.2
Diluted HEPS (cents) 996.0 479.7
Normalised HEPS (cents) 1 001.5 493.3
NAV (cents) 12 897 5 681
TNAV (cents) 7 147 4 599
Number of Bidvest shares in issue (thousands) 335 404 335 404
Number of Bidvest shares in issue net of treasury 326 837 330 955
shares (thousands)
Weighted average number of Bidvest shares in
issue (thousands) 325 399 329 517
Notes to the pro forma financial effects:
1. The “Before the Unbundling” column sets out the EPS, diluted EPS, HEPS, normalised HEPS, diluted
HEPS, NAV, TNAV, per Bidvest Group share prior to the Unbundling.
2. The “After the Unbundling” column sets out the EPS, diluted EPS, HEPS, normalised HEPS and diluted
HEPS, per Bidvest Group share assuming that the Unbundling took place with effect from July 1 2015
for pro forma statement of comprehensive income purposes and takes into account the following
adjustments:
a. inclusion of the income, expenditure and taxes relating to the excluded assets which will be
transferred to the Bidvest Group in terms of the Internal Restructuring. These adjustments will have
a continuing effect on Bidvest’s statement of comprehensive income;
b. exclusion of the income, expenditure and taxes relating to Bidvest Food Africa, Bidvest Food
Properties and the Transferring Assets which will be transferred to BidCorp in terms of the Internal
Restructuring;
c. exclusion of head office costs of R23.4 million and the related taxation adjustment which relate to
the costs of executives currently employed by Bidvest but who will be transferred to the BidCorp
subsequent to the Listing and Unbundling. These adjustments will have a continuing effect on the
Bidvest Group’s statement of comprehensive income;
d. reversal of the administrative fee expense incurred by subsidiaries of BidCorp of R19.7 million and
the related taxation adjustment which will no longer be receivable by Bidvest subsequent to the
Listing and the Unbundling. These adjustments will have a continuing effect on Bidvest Group’s
statement of comprehensive income;
e. share based payment (IFRS 2) relief of R12.4 million, and the related taxation adjustment, which
relates to the executives who are currently employed by Bidvest but will be employed by the
BidCorp subsequent to the Listing and Unbundling. This adjustment will have a continuing effect on
the Bidvest Group’s statement of comprehensive income. An additional IFRS 2 charge of R25.7
million and the related taxation adjustment, resulting from the early vesting of the existing CSP
scheme will be expensed in Bidvest and will not have a continuing effect on Bidvest’s statement of
comprehensive income. R19.9 million of this charge relates to BidCorp executives;
f. expensing of transaction costs, amounting to R18 million, which relate directly to the Listing and
which have been expensed in terms of IAS 32: Financial Instruments. These adjustments will not
have a continuing effect on Bidvest’s statement of comprehensive income; and
g. interest adjustment has been made in relation to the above items where it is deemed material.
6. Salient dates and times
The salient dates and times in relation to the Listing and the Unbundling are as follows:
2016
Circular posted to Shareholders Thursday, April 14
Distribution of BidCorp Pre-listing Statement to Shareholders Thursday, April 14
Last day to trade in order to be eligible to participate and vote at the Thursday, April 28
General Meeting
Record date in order to parcipate and vote at the General Meeting Friday, May 6
Form of proxy (yellow) for General Meeting to be received by 10h00 Thursday, May 12
General Meeting held at Bidvest, the boardroom, Bidvest House, 18
Crescent Drive, Melrose Arch, Melrose, Johannesburg at 10h00 Monday, May 16
Results of General Meeting and finalisation information in relation to the
the Listing and the Unbundling announced on SENS Tuesday, May 17
Results of General Meeting and finalisation information in relation to the
the Listing and the Unbundling published in South African press Wednesday, May 18
Last day to trade in Bidvest shares on the JSE to participate in Friday, May 27
Unbundling
Listing of BidCorp from the commencement of business (JSE share code: Monday, May 30
BID and ISIN: ZAE000216537)
Bidvest shares trade ex entitlement to BidCorp distribution shares Monday, May 30
Announcement of specified ratio in respect of apportionment of
costs/base costs of BidCorp for taxation/CGT purposes released on
SENS Tuesday, May 31
Announcement of specified ratio in respect of apportionment of
costs/base costs of BidCorp for taxation/CGT purposes released
published in the press Wednesday, June 1
BidCorp distribution shares unbundled to Shareholders Monday, June 6
Shareholder's account with CSDP or broker updated Monday, June 6
Note:
1. All times shown in this announcement are South African times unless otherwise stated.
2. The above dates and times are subject to amendment. Any material amendment will be
announced on SENS and published in the South African press.
7. Board opinion and recommendation
The Board is of the opinion that the terms and conditions of the Listing and Unbundling are fair
and that the implementation of the Listing and Unbundling will be to the benefit of Shareholders.
Accordingly, the Board recommends that Shareholders vote in favour of the special and ordinary
resolutions to be proposed at the General Meeting, a copy of which resolutions are embodied in
the Notice of General Meeting forming part of the Circular.
8. Circular to Shareholders
The Circular, including the Notice convening the General Meeting, together with the BidCorp pre-
listing statement, which documents contain full details of the Listing and the Unbundling, is being
posted to shareholders today. Copies of these documents may be obtained during normal
business hours from Thursday, April 14 2016 to Monday, May 16 2016 at the registered office of
Bidvest at Bidvest House, 18 Crescent Drive, Melrose Arch, Johannesburg, 2196. Both
documents are furthermore available on Bidvest’s website being www.bidvest.co.za.
9. General Meeting
Notice is hereby given of the General Meeting of Shareholders to be held at 10h00 on Monday,
May 16 2016 at the boardroom, Bidvest House, 18 Crescent Drive, Melrose Arch, Johannesburg,
for the purpose of considering and, if deemed fit, passing with or without modification, the special
and ordinary resolutions set out in the Notice of General Meeting.
The record date established by the directors in terms of section 59 of the Companies Act for the
purpose of determining which Shareholders are entitled to receive notice of the General Meeting
is Friday, April 8 2016 and for determining which Shareholders are entitled to participate and vote
at the General Meeting is Friday, May 6 2016.
10. Foreign Shareholders
It is the responsibility of any foreign Shareholder (including, without limitation, nominees, agents
and trustees for such persons) receiving the Circular and wishing to take up their entitlement to
unbundled BidCorp ordinary shares to satisfy themselves as to full observance of the applicable
laws of any relevant territory, including obtaining any requisite governmental or other consents,
observing any other requisite formalities and paying any issue, transfer or other taxes due in such
territories.
Foreign Shareholders are obliged to observe the applicable legal requirements of their relevant
jurisdictions. The Unbundling is governed by the laws of South Africa and is subject to any
applicable laws and regulations, including the exchange control regulations. Any Shareholder who
is in doubt as to his position with respect to the Unbundling in any jurisdiction, including, without
limitation, his tax status, should consult an appropriate independent professional adviser in the
relevant jurisdiction without delay. Foreign Shareholders are reminded that they may dispose of
their Bidvest shares prior to the last date to trade in which case they will not participate in the
Unbundling.
11. Withdrawal of cautionary announcement
Shareholders are referred to the cautionary announcements dated February 8 2016 and February
29 2016. As full details of the Listing and the Unbundling are set out in this announcement,
Shareholders are advised that they no longer need to exercise caution when dealing in their
Bidvest shares.
Melrose Arch
April 14 2016
Investment bank and transaction sponsor Legal advisers
The Standard Bank of South Africa Limited Edward Nathan Sonnenbergs Inc
Independent reporting accountants and auditors Transaction tax advisers
to Bidvest
Deloitte & Touche Cliffe Dekker Hofmeyr Inc
Reporting accountants and auditors to BidCorp
KPMG Inc.
Date: 14/04/2016 09:20:00 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.
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