IMPERIAL HOLDINGS LIMITED - Acquisition by Imperial of Palletways Group Limited

Acquisition by Imperial of Palletways Group Limited

Imperial Holdings Limited 
Incorporated in the Republic of South Africa 
Registration number:  1946/021048/06 
Ordinary share code:  IPL    ISIN: ZAE000067211 
Preference share code:  IPLP    ISIN: ZAE000088076 
(“Imperial”) 
                                                                              
ACQUISITION BY IMPERIAL OF PALLETWAYS GROUP LIMITED 
                                                                            
  1. INTRODUCTION 
      
     Imperial is pleased to advise its shareholders that Imperial Mobility International B.V., a 
     wholly?owned subsidiary of Imperial, has entered into a conditional agreement, with, inter 
     alia, Phoenix Equity Partners Limited (“Phoenix”) to acquire 100% of the issued share capital 
     of Palletways Group Limited and its subsidiary undertakings (“Palletways” or the 
     “Company”), for an enterprise value consideration of £162.9 million (ZAR3.8 billion) 
     (“Consideration”), subject to the fulfilment of the condition precedent set out in paragraph 
     5 below  (the “Acquisition”). 
 
  2. OVERVIEW OF PALLETWAYS AND THE ACQUISITION 
 
     Founded in the United Kingdom (“UK”) in 1994, Palletways provides an express delivery 
     solution for small consignments of palletised freight through more than 400 depots and 14 
     hubs, which collect and distribute 38,000 pallets daily or 8 million pallets annually across 20 
     European countries: Austria, Belgium, Bulgaria, Czech Republic, Denmark, Estonia, France, 
     Germany, Italy, Latvia, Lithuania, Luxembourg, Netherlands, Poland, Portugal, Republic of 
     Ireland, Romania, Spain, Slovakia and the UK, where it currently handles one in every four 
     pallets handled by palletised freight networks. 
      
     The Acquisition affirms the success of the current management team and the previous 
     owner, Phoenix, a leading UK mid?market private equity firm, in developing the business’ 
     value and reach through geographical expansion, and investment in Palletways’ sector 
     leading services.  
      
     Richard Daw, Managing Partner at Phoenix, said: “We have worked in close partnership 
     with James Wilson and Palletways’ management team to expand a UK business into a 
     European market leader. With its greater scale and growth potential, the business has 
     rightly attracted the attention of a strong strategic acquirer in the shape of Imperial.  We 
     wish James and his team well under Imperial’s ownership.”  
      
     Under Phoenix’s ownership, the Company has expanded significantly through a series of 
     green?field investments and international acquisitions, growing from a UK?only operation to 
     an integrated pan?European operator, while more than trebling profits over the last 3 years. 

     James Wilson, Chief Executive Officer at Palletways said: “We are delighted to be working 
     with Imperial as we move to the next stage of Palletways’ development by continuing to 
     expand into new markets, while enhancing our member and customer experience. The 
     Palletways management team shares a common vision with Imperial and remains fully 
     committed to the business as we pursue our strategy for further growth. This is an exciting 
     opportunity for Palletways, and all its members, to build on our success.” 
    
3. RATIONALE FOR THE ACQUISITION 
    
   The Acquisition of Palletways is in line with Imperial’s stated strategic intent to expand its 
   presence beyond South Africa through the acquisition of asset light logistics businesses that 
   benefit from Imperial’s existing footprint and capabilities. 
    
   The Acquisition complies with all of Imperial’s acquisition criteria namely: 
    
   -strategically coherent; 
       -  value accretive; 
       -  growth enhancing; 
       -  achievement of returns on invested capital above the weighted average cost of capital; 
           and  
       -  cash generative. 
        
       Palletways market leadership in its niche has been established under the leadership of 
       James Wilson and a management team committed to the roll out and delivery of the 
       performance on which the Acquisition was founded. 
    
   Mark Lamberti, Chief Executive Officer at Imperial said: “Palletways’ business model and 
   geographic reach will be complementary to our existing services and networks in the 
   logistics sector. We admire the past achievements of the management team and look 
   forward to working with them to enhance Palletway’s presence and service in the United 
   Kingdom and Europe.”  
    
4. SALIENT TERMS OF THE ACQUISITION 
    
   The Consideration will be settled by Imperial, by way of existing unutilised foreign credit 
   facilities and cash.  
    
   Palletways management’s long term commitment to the Company and its strategic 
   objectives is manifest in their decision to co?invest alongside Imperial to own approximately 
   4% of Palletways. 
    
5. CONDITION PRECEDENT 
    
   The Acquisition is subject to the fulfilment of the approval of the Acquisition by the 
   European Competition Authorities. The effective date will be the 5th business day after 
   fulfilment of the condition precedent.  
    
6. NET ASSETS, REVENUE AND ATTRIBUTABLE EBITDA 
    
   On signature date of the Acquisition, for the financial year ended 31 May 2016, Palletways’ 
   annual revenue is approximately £135.5 million (ZAR3.1 billion), its net asset value is 
   approximately £23.2 million (ZAR537.3 million), and its earnings before interest tax 
   depreciation and amortisation is approximately £16.4 million (ZAR380.5 million), of which 
   approximately 96% will be attributable to Imperial. 
        
          
          
    7. CATEGORISATION OF THE ACQUISITION 
 
       The Acquisition is classified as a Category 2 transaction in terms of the Listing Requirements 
       of the JSE Limited (“Listings Requirements”). 
        
       Imperial confirms that the constitutional documents of Palletways will allow Imperial to 
       continue to comply with its obligations in terms of the Listings Requirements. 
 
       Bedfordview 
       1 June 2016 
        
       Financial advisor and transaction sponsor 
       The Standard Bank of South Africa Limited 
        
       JSE Sponsor: 
       Merrill Lynch South Africa (Pty) Limited 
        
       Attorneys 
       Squire Patton Boggs 
        

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