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Acquisition By KAP Of Safripol Holdings Proprietary Limited
KAP INDUSTRIAL HOLDINGS LIMITED
Incorporated in the Republic of South Africa
(Registration Number 1978/000181/06)
Share code: KAP
ISIN: ZAE000171963
(“KAP”)
ACQUISITION BY KAP OF SAFRIPOL HOLDINGS PROPRIETARY LIMITED
1. Introduction
The board of directors of KAP announce that agreement has been reached between KAP and
the shareholders of Safripol Holdings Proprietary Limited (“Safripol”), in terms of which a nominated
wholly-owned subsidiary of KAP (the “Purchaser”) will, subject to the conditions precedent set out
below, acquire the entire issued ordinary share capital of Safripol through a series of integrated
transactions (the “Transaction”).
2. Background to and nature of the Safripol business
Safripol was established in 1972 and is currently owned by Rockwood Fund I GP Proprietary Limited
(“Rockwood”), Thebe Safripol Investments Proprietary Limited (“Thebe”) and certain members of
the Safripol management team (collectively referred to as the “Sellers”).
Safripol manufactures Polypropylene (“PP”) and High-Density Polyethylene (“HDPE”), which are
used to manufacture an extensive range of industrial and consumer products.
- PP is a versatile high quality lightweight plastic raw material used in the manufacture of
injection-moulded and blow-moulded articles, piping, sheet and textile fibres.
- HDPE is the most widely used plastic raw material globally and is used in the manufacture of
blow-moulded containers, crates, drums, film and pipe products and is ideally suited to food
contact applications.
3. Rationale for the Transaction
KAP is invested in a number of industry leading industrial businesses managed within two
segments: Diversified Logistics and Diversified Industrial. The Diversified Industrial segment includes
chemical operations comprised of its Hosaf and Woodchem businesses. It is one of KAP’s strategic
objectives to grow its business by investing in industry leading industrial assets that are
complementary to its existing operations. The Safripol business operates in the chemical sector
and produces complementary products to those of Hosaf, with a similar business model. The
Transaction represents an ideal fit for KAP in terms of its key investment criteria, being Safripol’s
market leadership, high barriers to entry, strong cash generative qualities and competent
management with sufficient depth and continuity.
The acquisition of Safripol will form part of the Diversified Chemical segment for KAP which will
incorporate the Safripol, Hosaf and Woodchem businesses.
4. The Transaction
4.1. Terms of the Transaction
The Purchaser will , on terms and conditions as specified in the relevant transaction agreement
effectively acquire, the entire issued ordinary share capital in Safripol for a cash consideration of
R4.1 billion (the “Purchase Consideration”), on a debt free, cash free basis, to be settled in cash
on the Effective Date.
4.2. Effective Date of the Transaction
If all Conditions Precedent are fulfilled, the effective date for the Transaction will be
1 January 2017. However, if any Conditions Precedent remain outstanding at 1 January 2017, the
effective date of the Transaction will be the first day of the month following the date of fulfillment
or waiver, as the case may be, of the last of the conditions precedent, set out in paragraph 4.3
below (“Effective Date”).
4.3. Conditions Precedent
The Transaction is subject to the fulfillment or waiver (where applicable) of, inter alia, the following
Conditions Precedent within the specified time periods, or such later dates as the parties may
agree in writing:
4.3.1. Adoption by the parties on or before the signature date of the necessary resolutions
authorizing the transaction;
4.3.2. securing the written consent, from the funder of Safripol within ten business days after the
signature of the sale agreement that it shall not, as a result only of the implementation of
the Transaction, accelerate the repayment of any of the facilities granted by it to
Safripol;
4.3.3. the filing, within fifteen business days after signature of the sale agreement, of the Merger
Notification with the Competition Authorities and the approval of the Transaction by the
Competition Authorities, evidenced by the issue of a merger clearance certificate on or
before 31 December 2016;
4.3.4. KAP securing the funding it requires to implement the Transaction within twenty business
days after signature of the sale agreement, to the reasonable satisfaction of the Sellers;
4.3.5. no event having occurred between signature date and Effective Date which has
resulted in or is likely to result in Safripol’s main supplier having the right to permanently
cease the supply of raw material to Safripol.
4.4. Value of net assets and profits attributable to Safripol
As at 31 December 2015, being the last financial year and reporting period of Safripol, the value
of the net assets as disclosed in the annual financial statements of Safripol amounted to
R747 million.
The profit after tax attributable to the net assets of Safripol for the same period amounted to R488
million.
4.5. Memorandum of Incorporation of Safripol
In compliance with paragraph 9.16 of the JSE Limited Listings Requirements (“LR”), KAP, in co-
operation with Safripol, will ensure that the provisions of the memorandum of incorporation of
Safripol will not frustrate KAP’s compliance with the obligations of the LR.
Additional Information on the Transacting Parties
- Rockwood Private Equity is a prominent South African private equity fund manager focusing on
strategic equity positions in medium to large companies with experienced management teams.
- Thebe Investment Corporation is a prominent South African investment company managing
investments in excess of R6 billion in various sectors.
10 August 2016
Stellenbosch
Sponsor to KAP
PSG Capital Proprietary Limited
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